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THE  GIFT  OF 

MAY  TREAT  MORRISON 

IN  MEMORY  OF 

ALEXANDER  F  MORRISON 


Taxation  and  the  Distribution  of  Wealth 


Taxation  and  the 
Distribution  of  Wealth 

STUDIES  IN  THE  ECONOMIC,  ETHICAL,  AND  PRACTICAL 

RELATIONS    OF    FISCAL   SYSTEMS    TO 

SOCIAL    ORGANIZATION 

By 
FREDERIC  MATHEWS 


Garden  City        New  York 

DOUBLEDAY,  PAGE  &  COMPANY 

1914 


Copyright,  IQ14  J)y 
Frederic  Mathews 

All  rights  reserved,  including  that  of 

translation  into  foreign  languages, 

including  the  Scatuiinavian 


Man  is  generally  considered  by  statesmen  and  projectors  as  the 
^  materials  of  a  sort  of  political  mechanics.  Projectors  disturb  nature 
K  in  the  course  of  her  operations  on  human  affairs,  and  it  requires  no  more 
g  than  to  leave  her  alone  and  give  her  fair  play  in  the  pursuit  of  her  ends 
that  she  may  establish  her  own  designs.  .  .  .  Little  else  is  required 
to  carry  a  state  to  the  highest  degree  of  affluence  from  the  lowest  bar- 
Q  barism  but  peace,  easy  taxes,  and  a  tolerable  administration  of  justice; 
2  all  the  rest  being  brought  about  by  the  natural  course  of  things, 
o  Adam  Smith. 


■r 

O 

t 


CONTENTS 

PAGE 

Introduction xv 

Tart  I 

PROTECTION 

Book  I— The  Old  Protection.         Book    II— The    New 

Protection. 

BOOK  I  — THE  OLD  PROTECTION 

Chapter       I — First  Principles  of  Protection        ...        3 
Section     i — The  Origins  of  Protection,  3 
Section    11 — Gold  and  Wealth,  6 
Section  iii — The  Balance  of  Trade,  7 

Chapter     II — General  Protection 18 

Section     i — Protection  and  Capital,  18 
Section    11 — The  Infant  Industry,  20 
Section  iii — Protection  of  Industry,  28 

Article  i — Protectionist  Maxims.      Article  2 — Protection    which 
Raises  Price.     Article  3 — Protection  which  Lowers  Price. 

Chapter    III — Protection  and  Labour 38 

Section     1 — The  Creation  of  a  Demand  for  Labour  by 

Protective  Taxation,  38 
Section    11 — The  Raising  of  Wages  by  Protective  Taxation,  40 
Section  iii — Pauper  Labour  and  Protection,  41 
Section  iv — Protected  Labour  in  the  United  States,  46 

BOOK  II  — THE  NEW  PROTECTION 

Chapter       I — ^Analysis  of  the  New  Protection  .       .       .        55 

Chapter     II — Productive  Potentialities        ....        59 

Chapter    III — The  Attraction  of  Capital      ....        66 
Section     1 — Capital  Attracted  by  Taxation,  66 
Section    11 — Effects  of  Taxation  on  Capital,  73 


Vlll 


Contents 


Chapter     IV — Dumping 75 

Section      i — Taxation  for  the  Encouragement  of  Dumping,  75 
Section    11 — Taxation  for  the  Prevention  of  Dumping,  84 

Chapter       V — The  Tariff-Weapon 94 

Section      1 — The  Import  Duty  as  a  Weapon,  94 
Section     11 — The  Tariff- Weapon  and  Trade,  97 
Article  i — Diplomacy.    Article  2 — Preference. 
Section      iii — Tariff  Warfare,  109 

Chapter     VI — Imperialism  and  Progress 118 


Tart  II 

TAXATION 
Book  I — Indirect  Taxation.        Book  II — Direct  Taxation. 


BOOK  I  — INDIRECT  TAXATION 

Chapter       I — General  Principles  of  Taxation    . 

Chapter      II — The  Taxation  of  Consumption 
Section      i — Advantages  of  Indirect  Taxation,   126 
Section     11 — Taxing  the  Foreigner,   128 
Section   ni — Indirect  Taxation  for  Revenue,  136 

Article    i — General    Considerations.    Article    2 — Luxuries. 

Article    3 — Necessaries. 

Section    iv — Convenience  and  Security  of  Indirect  Taxation,  141 

Article  i — Convenience.     Article  2 — Security. 
Section     v — Expense  of  Indirect  Taxation,  143 


123 
126 


BOOK  II  — DIRECT  TAXATION 

Chapter       I — Personal  Property      .       .       .       , 
Section      i — Classification  of  Property,   151 
Section     ii — Income,  151 
Section    iii — Inheritance,  155 
Section    iv — Credits,  155 

Article  i — Securities.     Article  2 — Bank  Deposits. 
Coin.    Article  4 — Notes.      Article  5 — Summary. 

Section     v — Chattels,  159 

Section   vi — Miscellaneous  Taxes,  161 


151 


Article  3^ 


Contents  ix 

PAGE 

Chapter  II— Real  Property 164 

Section      i — Classification,  164 

Section  11 — Capital  Value  of  Improvements,  164 

Section  iii — Capital  Value  of  Land,  165 

Section  iv — Rent  of  Improvements,  164 

Section  v — Ground-Rent,  170 

Chapter    III — Comparative  Classification  of  the  Sources 

OF  Social  Revenue 173 


Tart  III 
THE    NATURAL    TAX 

Book  I — The  Value  of  the  Land.  Book  II — The  Tran- 
sition. Book  III  —  Incidence  of  Taxation^  Indirect  and 
Direct.     Book  IV  —  Fiscal  Problems. 


BOOK  I  —  THE  VALUE  OF  THE  LAND 

Chapter       I — Difficulties  in   Direct  Taxation  of  Land 

Values 179 

Chapter  II — Land  Values 181 

Section  i — General  Considerations,  181 

Section  11 — Method  of  Estimation,  183 

Section  iii — Estimates,  192 

Article  i — Great  Britain  1885.  Article  2 — The  United  States 
1890.  Article  3 — Pennsylvania.  Article  4 — Connecticut.  Article 
5 — Boston.    Article  6 — Summary. 

Section   iv — Other  Estimates,   201 

Article  i — Great  Britain  1899.    Article  2 — Other  Countries. 


BOOK  II— THE  TRANSITION 

Chapter       I — The  Land  and  Society 208 

Chapter     II — Direct  Assessment  of  Land  Values:   Con- 
fiscation AND  Compensation        .       .       .       213 


X  Contents 

PAGE 

Chapter    III — The   Repeal  of  Indirect  Taxes     .       .       .       224 
Section      i — Tariff-Weapon  Taxes,  224 
Section    11 — Protective  Taxes,  224 

Article     i — Exporting    Industries.      Article    2 — Domestic    In- 
dustries. 

Section  in — Revenue  Taxes,  226 
Chapter    IV — The  Establishment  of  Land  Values    .       .      227 
Chapter      V — The  Diffusion  of  a  Tax  on  Land  Values        235 

BOOK    m  — INCIDENCE    OF    TAXATION,    INDIRECT    AND 

DIRECT 

Chapter       I — Incidence    of    Indirect    Taxation    in    the 

United  States 239 

Chapter      II — Incidence  of  a  Direct  Tax  on  Land  Values      247 

BOOK  IV— FISCAL  PROBLEMS 

Chapter       I — Labour 258 

Section      i — Labour  and  Indirect  Taxation,  258 
Section     11 — Labour  and  Direct  Taxation,  265 

Chapter      II — Railways 269 

Chapter    III — Money 278 

Chapter     IV — Property 7»  ^^^ 

Chapter      V — Natural  Economics 293 


Tart  IF 
PROGRESS 

Book  I — Progress  and  Politics,       Book    II — Intellectual 
Progress.     Book  III — Religion.     Book  IV^ — Philosophy. 


BOOK  I— PROGRESS  AND  POLITICS 

Chapter        I — Introduction 

Chapter      II — Darwin  and  Weismann 

Chapter    III — Political  Progress  and  Reason     . 


303 

309 
316 


Contents  J  xi 

PAGE 

BOOK  II— INTELLECTUAL  PROGRESS 

Chapter       I — The  Great  Man 326 

Chapter     jll — The  Law  of  Intellectual  Progress  .       .        331 
Section      i — Method  of  Inquiry,  331 
Section    11 — Art,  333 

Article  i — Classification.  Article  2 — Architecture.  Arti- 
cle 3 — Sculpture.  Article  4 — Painting.  Article  5 — Music. 
Article  6 — Poetry. 

Chapter   III — Science  and  Man 349 

BOOK  III— RELIGION 

Chapter       I — Object  and  Method  of  Inquiry      .       .       .  356 

Chapter     II— Lao-tsze          366 

Chapter    III—Confucius 369 

Chapter    IV~Brahmanism           372 

Chapter      V — Buddhism '378 

Chapter    VI— Zoroaster 380 

Chapter  VII — Egypt 383 

Chapter  VIII— Judaism 387 

Chapter    IX — Mohammed 389 

Chapter     X — Greece 393 

Section      1 — Introduction,  393 

Section    TL — Greek  Tragedy,  396 

Section  Hi — Greek  Philosophy,  400 

Article  i — The  Early  Philosophers.     Article  2 — Socrates.     Arti- 
cle 3— Plato.     Article  4 — Aristotle.     Article  5 — Cleanthes. 

Chapter    XI — Romj: 417 

Chapter  XII — Summary 420 

BOOK  IV— PHILOSOPHY 

Chapter       I— Pre-Socratic  Thought 423 

Section     i — Introduction,  423 

Section     n — The  Physicists,  426 

Article  i — Thales.     Article  2 — ^Anaximenes.    Article  3 — Diog- 
enes of  Apollonia. 

Section  iii — The  Metaphysicians,  431 

Article  i — Anaximander.    Article  2 — Pythagoras.     Article  3 — 
Xenophanes.     Article  4 — Paxmenides.     Article  5 — ^Zeno  and 
Melissus. 


3ai  Contents 

PAGE 

Section    iv— The  Metaphysical  Physicists,  342 

Article   i — Heraclitus.      Article   2 — Empedocles.       Article  3 — 
Democritus. 

Section     v — The  Physical  Metaphysicians,  460 

Article  i — Anaxagoras.     Article  2 — Protagoras.      Article  3 — 
Gorgias. 

Chapter      II — Attic  Philosophy 475 

Section      I — Socrates,  475 

Section    n — The  Socratic  Schools,  479 

Article    i  — Introduction.     Article   2  — ^The   Megarians.     Arti- 
cle 3  —The  Cyrenaics.    Article  4  — The  Cynics. 

Section  in — Plato,  483 

Section  iv — Aristotle,  488 

Section  v — Epicurus,  493 

Section  vi— Zeno,  the  Stoic,  495 

Section  vn — Pyrrho,  497 

Chapter    III — Mysticism ,       .      502 

Section      i — The  Alexandrians,  502 
Section    n — Faith,  504 

Chapter     IV — Modern  Philosophy 509 

Chapter  V — Christ 521 

Section      i — The  Law  of  Substance,  521 

Section  11 — The  Law  of  Reason,  536 

Section  in — The  Law  of  God,  529 


Tart  V 

POLITICS 

Book  I — Political  Thtory.      Book  II — Political  Practice. 
Book  III — Practical  Politics. 

BOOK  I— POLITICAL  THEORY 

Chapter       I — Introduction  .       .              .....  547 

Chapter      II — Aristocracy 556 

Chapter    III — Democracy 561 

Chapter     IV — Natural  Society 568 


Contents  xiii 

PAGE 

BOOK  II— POLITICAL  PRACTICE 

Chapter       I — ^The  Indirect  Tax  in  Practice       .       .       .  582 

Chapter     II— Practical  Socialism 588 

Chapter    III — Fiscal  Mechanics 615 

Chapter    IV — The  Fiscal  Clearing  House     .       .       ,       ,  621 

BOOK  III— PRACTICAL  POLITICS 

Chapter       I — The  Indirect  Tax  in  the  United  States          .  628 
Section      i — Indirect  Finance,  628 
Section    11— Direct  Finance,  636 
Section  in — Applied  Direct  Finance,  638 

Chapter      II — France 644 

Chapter    III — Germany 647 

Chapter     IV — Russia 650 

Chapter      V — England 652 

Chapter    VI — ^The  East 656 

Chapter  VII — Conclusion 658 

Authors,  Editions,  and  Sources  Quoted 665 

Index 673 


Introduction 

Among  the  more  important  questions  confronting  the  twentieth  cen- 
tury are  those  deahng  with  the  distribution  of  wealth.  The  systems 
of  taxation  upon  which  national  administrations  are  based,  are  impor- 
tant factors  in  this  connexion.  The  relation  of  these  systems  to  the 
general  process  of  the  production  and  distribution  of  wealth  is  here 
reviewed. 

The  subject  naturally  falls  into  several  fields.  A  government  may 
seek,  through  the  taxing  powers  under  its  control,  to  develop  or  protect 
the  industrial  life  of  the  society  it  administers.  It  may  Hmit  their  use 
to  purely  fiscal  objects;  and  again,  use  them  in  order  to  further  the 
various  political  interests  of  the  social  organization:  actually  and  in 
relation  to  other  societies. 

The  system  of  industrial  Protection,  or  the  attempt  to  develop  the 
productive  capacity  of  a  society  through  the  use  of  the  Tariff,  and 
other  forms  of  administrative  assistance,  is  discussed  in  Part  I.  Part  II 
is  devoted  to  the  examination  of  different  methods  of  supplying  social 
financial  needs.  Among  other  policies  reviewed  is  that  of  basing  social 
fiscal  demands,  so  far  as  possible,  upon  the  annual  wealth  created  by  the 
society  as  a  whole,  in  the  form  of  the  values  represented  by  its  unim- 
proved land  area.  For  reasons  developed,  this  policy  seems  worthy 
detailed  examination.    Part  III  presents  such  examination. 

It  is  impossible  to  discuss  national  financial  methods  in  their  wider 
application,  without  meeting  pofitical  and  social  questions  leading  into 
fields  not  limited  by  economic  inquiry.  The  relation  of  national  fiscal 
policies  to  the  intellectual  life  of  a  people  is  important.  The  dominant 
conceptions  of  progress  affect  the  means  through  which  a  nation  meets 
the  expenses  of  organized  existence.  The  relatively  recent  develop- 
ments of  the  evolutionary  sciences  present  questions  of  social  and 


Introduction 

political  significance.  A  study  of  organized  society  can  scarcely  be 
undertaken  without  coming  in  contact  with  ethical  and  theological 
influences;  these,  in  turn,  involving  problems  of  a  speculative  or  philo- 
sophic natm-e.  No  discussion  of  the  fundamental  ideas,  underlying 
existing  political  and  social  structures,  would  seem  complete  without 
an  examination  of  their  connexion  with  such  problems.  Part  IV  is, 
therefore,  occupied  with  the  relation  of  the  evolutionary  sciences,  intel- 
lectual progress,  speculative,  theological  and  philosophic  thought,  to 
the  subject  of  social  and  political  organization. 

Part  V  deals  with  the  relation  of  the  subjects  discussed  to  systems  at 
present  in  force. 


Part  I 

PROTECTION 


BOOK  I 
THE  OLD  PROTECTION 

BOOK  II 
THE  NEW  PROTECTION 


Book  I  ' 
THE    OLD     PROTECTION 

CHAPTER  I 

FIRST    PRINCIPLES     OF    PROTECTION 

Section    I  —  The   Origins    of    Protection.     Section    II  —  Gold   and 
Wealth.    Section  III  — The  Balance  of  Trade. 


Section  I  —  The  Origins  of  Protection 

PROTECTION,  as  embraced  in  national  fiscal  systems,  is  a 
policy  of  using  the  taxing  powers  of  a  society  in  order  to  pro- 
tect or  develop  its  industrial  life.  The  earlier  conceptions 
upon  which  general  Protection  rests  have  been  superseded  in 
part  by  the  latter-day  developments  of  the  system;  as  it  is  impossible, 
however,  to  understand  these  without  an  examination  of  the  older 
foundations  upon  which  the  modern  structures  are  reared,  the  earlier 
forms  of  Protection  are  here  reviewed.  The  subject  thus  falls  into  two 
fields:  The  Old  and  the  New  Protection. 

The  origin  and  history  of  Protection  are  generally  traced  to  a  single 
source.  The  majority  of  protective  policies  seems  to  be  derived,  his- 
torically at  least,  from  one  fundamental  economic  idea  which  played 
a  dominant  part  in  the  political  life  of  its  day;  although  at  present  sub- 
merged or  largely  superseded  by  other  considerations.  This  idea  is  that 
wealth  and  the  monetary  metals  are  interchangeable  terms,  referring  to 
identical  things.  In  other  words,  that  the  wealth  of  a  nation  is  directly 
dependent  upon  the  quantity  of  gold  and  silver  it  possesses;  or  again, 
that  the  wealth  of  a  nation  is  exactly  measured  by  the  amount  of  gold 
and  silver  it  controls  at  any  given  time. 

This  idea  long  dominated  economic  thought.  It  was  evident  that  the 
precious  metals  were  the  most  easily  convertible  and  least  perishable  of 
commodities  and  that  they  represented  all  others  as  their  simplest 
expression;  what,  therefore,  more  natural  than  for  governments  to 
suppose  that  their  wisest  course  lay  in  using  their  powers  to  attract  and 


4  The  Old  Protection  Pt.  I 

hold  these  metais,  and  that  this  policy  should  be  regarded  as  the  best 
means  of  incret-sing  the  wealth  of  the  people? 

The  origin  of  this  conception  is  lost  in  remote  antiquity,  but  from  it 
sprang  the  Mercantile  System  from  which  present  Protection  is  derived, 
in  both  theory  and  application.  "  Midas,"  says  Mr.  Macleod,  ^  "  was  the 
parent  of  the  Mercantile  System,  and  for  several  centuries  every  Gov- 
ernment in  Europe  was  imbued  with  his  ideas.  .  .  Midas  saw  that 
with  treasure  in  his  hand  he  was  wealthy  —  he  could  obtain  whatever  he 
wanted,  and  could  command  the  services  of  others.  .  .  The  very 
same  ideas  gradually  grew  up  in  Europe.  Sovereigns  saw  that  their 
chief  power  consisted  in  the  treasure  they  could  accumulate.  It  then 
became  a  cardinal  point  in  their  policy  to  encourage  the  importation  of 
money  as  much  as  possible  and  to  prohibit  its  export.  .  .  The 
Spaniards,  dazzled  with  the  brilliant  prospect  of  securing  the  greatest 
part  of  the  wealth  of  the  world,  without  labour,  imagined  that  the  well- 
being  of  the  country  consisted  in  amassing  enormous  heaps  of  gold  and 
silver." 

The  accumulation  of  the  precious  metals,  as  the  measure  of  all  wealth, 
thus  became  the  dominant  policy  of  governments;  laws  of  the  greatest 
severity  were  enacted,  prohibiting  the  exportation  of  gold,  and  every 
means  offered  to  encourage  its  importation.  Such  was  the  fundamental 
economic  principle  in  Europe,  before  the  beginning  of  what  is  called  the 
Commercial  Age. 

As  population  increased,  however,  and  as  intercourse  between  the 
nations  became  more  general,  the  value  of  this  policy  was  questioned. 
Instead  of  aiding  national  and  individual  accumulation,  the  reverse  was 
the  case.  It  was  seen  that  this  prohibitive  system  interfered  with  the 
purchase  of  foreign  goods,  for  it  was  easier  to  buy  abroad  with  gold  than 
with  commodities.  It  was  found  that  the  exportation  of  the  precious 
metals  did  not  lessen  their  amount  in  the  exporting  country,  but  tended 
rather  to  their  increase;  for  goods  bought  with  gold  might  be  sold  abroad, 
and  a  profit  thus  returned  upon  the  gold  exported.  The  apparent  folly 
of  sending  gold  out  of  the  country  was  compared  to  the  actions  of  the 
husbandman  in  sowing  seed.  "If  we  only  behold  the  actions  of  the 
husbandman  in  the  seed-time,"  says  Mr.  Mun,^  "when  he  casteth  away 
much  good  corn  into  the  ground,  we  shall  account  him  rather  a  madman 
than  a  husbandman.     But  when  we  consider  his  labours  in  the  harvest, 


'  The  Principles  of  Economical  Philosophy,  Vol.  I.,  p.  5°- 

'  Cited  by  Adam  Smith.  The  Wealth  of  Nations,  Bk.  IV.,  ch.i.,  p.4. 


Bk.  I  First  Principles  of  Protection  5 

which  is  the  end  of  his  endeavours,  we  shall  find  the  worth  and  plentiful 
increase  of  his  actions." 

Here,  then,  arose  a  new  economic  policy  destined  to  supplant  the  old. 
It  was  said  that  the  small  bulk  of  the  precious  metals  made  it  impossible 
for  governments  to  prevent  their  exportation,  and  that  there  was  a  policy 
which  would  cause  them  to  flow  back  if  exported;  a  policy  by  means  of 
which  governments  might  even  create  an  inflowing  stream  of  gold.  It 
was  shown,  unless  exports  and  imports  were  equal,  that  there  must  result 
a  certain  remainder,  or  balance  of  value,  not  payable  in  goods  which  must 
be  paid  in  gold;  this  balance,  it  was  said,  was  the  important  element  in 
international  exchange;  and  upon  it  depended  the  net  profit,  or  advan- 
tage, of  a  nation's  commerce  with  other  nations.  The  title  of  Mr.  Mun's 
book  —  England's  Treasure  in  Foreign  Trade  —  illustrates  the  principle. 
Here  arises  that  conception  in  exchange,  long  dominant  in  Europe,  and  still 
affecting  nearly  all  governmental  policies:  the  conception  of  the  ''balance 
of  trade."  This  balance  is  the  difference  between  the  values  of  exports 
and  imports,  measured  in  money,  which  a  nation  must  apparently  pay 
or  receive  in  order  to  settle  foreign  exchange.  Where  this  balance  is 
favourable,  a  stream  of  gold  appears  to  flow  toward  a  given  nation; 
where  unfavourable,  the  nation  seems  in  danger  of  being  drained  of  its 
monetary  metals.  As  the  balance  of  trade  depends  upon  the  relative 
values  of  exports  and  imports,  there  seems  but  one  policy  for  a  govern- 
ment to  adopt:  it  should  turn  its  energies  toward  increasing  the 
value  of  exports  and  diminishing  that  of  imports,  for  gold  will  thus, 
seemingly,  flow  in  its  direction  and  into  the  coffers  of  the  people. 

Such  is  the  theory  of  international  exchange,  based  upon  the  balance 
of  trade.  A  favourite  illustration  is  an  analogy  drawn  between  the 
trade  of  a  nation  and  that  of  a  merchant:  the  merchant's  profits,  it  is 
said,  depend  upon  the  value  of  sales  (exports)  in  relation  to  the  value  of 
purchases  (imports).  The  greater  the  value  of  sales  and  the  less  that 
of  purchases,  the  greater  must  be  the  money  balance  between  the  two,  or 
total  profit. 

If  the  economic  validity  of  these  considerations  is  admitted,  the  advan- 
tages of  the  protective  system  are  apparent.  There  are  different  ways  of 
affecting  exchange  with  reference  to  the  balance  of  trade:  drawbacks, 
boimties,  and  restrictions  of  various  kinds  readily  suggest  themselves; 
one  method,  however,  is  peculiarly  adapted  to  the  purpose:  the  obvious 
policy  of  restricting,  taxing,  or  prohibiting  imports  under  what  seem  the 
most  advantageous  conditions. 


6  The  Old  Protection  Pt.  I 

The  two  fundamental  conceptions  lying  at  the  base  of  modern  protec- 
tionist philosophy  have  now  been  developed  and  may  be  expressed  as 
follows:  (i)  That  gold  and  wealth  are  the  same  things.  (2)  That 
the  amount  of  wealth  may  be  increased  in  any  area  by  a£fecting  the 
balance  of  trade. 

Section  II  —  Gold  and  Wealth 

Whether  gold  and  wealth  may  reasonably  be  regarded  as  identical, 
will  depend  upon  the  meanings  given  to  these  expressions.  The  mean- 
ing of  gold  is  too  clear  to  require  elaboration;  the  term  denotes  one  of 
the  precious  metals.  The  meaning  of  wealth,  however,  is  more  elusive. 
Perhaps  the  most  satisfactory  definition  may  be  found  in  the  pages  of 
Adam  Smith,  ^  who  says: 

"A  nation  may  import  to  a  greater  value  than  it  exports  for  half  a 
century,  perhaps,  together;  the  gold  and  silver  which  comes  into  it 
during  aU  this  time  may  be  all  immediately  sent  out  of  it;  its  circulating 
coin  may  gradually  decay,  different  sorts  of  paper  money  being  sub- 
stituted in  its  place,  and  even  the  debts  too  which  it  contracts  in  the 
principal  nations  with  whom  it  deals  may  be  gradually  increasing;  and 
yet  its  real  wealth,  the  exchangeable  value  of  the  annual  produce  of  its 
lands  and  labour,  may,  during  the  same  period,  have  been  increasing  in 
a  much  greater  proportion." 

This  passage  contains  not  only  an  interesting  distinction  between  gold 
and  wealth,  but,  perhaps,  the  best  definition  of  "wealth":  the  exchange- 
able value  of  the  annual  produce  of  land  and  labour.  It  is  unnecessary 
to  dwell  upon  the  difference  between  any  given  metal  and  the  entire 
produce  of  land  and  labour,  regarded  as  a  factor  in  exchange.  It  is 
evident  from  this  definition  of  wealth  that  gold,  or  the  monetary  metals, 
and  wealth,  should  never  be  confused.  To  say  that  gold  is  wealth  is 
analogous  to  the  statement  that  a  bay  is  the  ocean,  or  that  a  mountain 
is  the  earth.  "It  would  be  too  ridiculous,"  says  Smith, ^  "to  go  about 
seriously  to  prove  that  wealth  does  not  consist  in  money,  or  in  gold  or 
silver,  but  in  what  money  purchases,  and  is  valuable  only  for  purchasing. 
Money,  no  doubt,  makes  always  a  part  of  the  national  capital;  but  it 
has  already  been  shown  that  it  generally  makes  but  a  small  part,  and 
always  the  most  unprofitable  part  of  it." 

If  wealth  were  measured  by  the  possession  of  gold,  the  wealth  of  a  man 

1  The  Wealth  of  Nations,  Bk.  IV.,  ch.   iii.,     p.  72, 

2  Ibid.,  Bk.  IV.,  ch.  i.,  p.  10. 


Bk.  I  First  Principles  of  Protection  7 

owning  thousands  of  acres  of  land  and  tens  of  thousands  of  cattle,  would 
be  measured  by  whatever  amount  of  gold  he  happened  to  possess  at  any 
given  time.  If  he  had  no  gold,  he  would  be  a  poor  man.  If  he  sold 
cattle  for  100  ounces  of  gold,  his  wealth  would  be  increased  by  that 
amount,  although  the  cattle  might  have  cost  him  twice  that  much.  If 
he  bought  horses  with  the  gold,  he  would  immediately  become  poor  again. 
If  he  bought  horses  for  100  ounces  of  gold,  and  sold  cattle  for  50  ounces, 
he  would  impoverish  himself  to  the  extent  of  a  flow  of  50  ounces  of  gold 
out  of  his  pockets.     This  is  the  "Balance  of  Trade." 

Section  III  —  The  Balance  of  Trade 

The  foregoing  definition  of  wealth  develops  a  better  position  for  the 
study  of  the  protective  system  in  relation  to  the  balance  of  trade.  If  this 
definition  is  accepted,  it  follows  that  a  government,  in  attempting  to 
influence  the  balance  of  trade,  is  not  afl^ecting  wealth  in  general,  but  is 
attempting  to  increase  the  flow  of  gold  toward  its  territory  —  a  very 
different  thing.  This  fact  may,  however,  be  accepted,  and  the  balance 
of  trade  theory,  based  upon  the  confusion  of  gold  and  wealth,  be  re- 
jected; yet  another  balance  of  trade  theory  may  at  once  be  suggested, 
based  upon  this  distinction  itself. 

Gold,  it  may  be  said,  is  not  wealth  in  any  exact  sense;  but  gold  is 
none  the  less  a  desirable  part  of  wealth,  representing  the  least  perishable 
and  most  constant  value  known,  and  playing,  in  consequence,  an  excep- 
tional role  in  international  exchange.  Other  commodities  are  consumed 
and  disappear,  while  gold  remains  and  holds  its  value;  other  commod- 
ities fluctuate,  while  gold  is  relatively  stable;  its  presence  may  exert 
a  disproportionate  influence  upon  commerce;  and,  more  intrinsically 
desirable  than  other  commodities,  its  accumulation  is  a  policy  to  be 
encouraged.  The  balance  of  trade  theory,  based  upon  these  considera- 
tions, and  the  relation  of  export  to  import  values,  plays  an  important 
part  in  modern  political  life  and  is  worthy  examination. 

Gold  obviously  possesses  no  advantage  over  other  commodities  in  the 
satisfaction  of  human  needs;  it  neither  warmc  nor  shelters,  clothes  nor 
nourishes;  yet  it  represents  the  warmth,  the  shelter,  the  clothes  and  the 
nourishment  obtained  through  the  consumption  of  other  commodities. 
There  is,  however,  a  difference  between  a  thing  and  that  which  it  repre- 
sents. While  the  value  of  food,  clothing,  and  houses  is  inherent  in  them, 
the  value  of  gold  is  of  a  distinct  nature  and  consists,  not  in  its  ability  to 
satisfy,  but  to  represent  these  in  the  channels  of  commerce,  and  thus 


8  The  Old  Protection  Pt.  I 

avoid  the  expense  and  inconvenience  of  barter.  This  representative,  or 
commercial,  value  of  gold  is  of  importance  in  exchange,  owing  to  its 
exceptional  qualities  as  a  medium  through  which  the  consumable  wealth 
of  the  world  may  be  distributed. 

The  value  of  gold  is  thus  dependent  upon,  and  conditioned  by, 
the  existence  of  consumable  wealth  demanding  distribution  through 
exchange.  Where  such  wealth  exists  without  gold  exchange  may  be 
effected  independently  of  it;  the  value  of  exchangeable  wealth,  therefore, 
does  not  depend  upon  the  presence  of  gold.  On  the  contrary,  the  value 
of  gold  arises  alone  through  the  existence  of  the  exchangeable  wealth; 
where  gold  exists  without  consumable  commodities,  the  gold  can  pur- 
chase nothing;  that  is,  has  no  commercial  value.  On  the  other  hand, 
where  exchangeable  wealth  exists  without  gold,  the  capacity  to  purchase 
gold  exists  with  it,  and  the  value  of  general  wealth,  if  not  independent 
of  the  presence  of  gold,  seems  but  little  affected  thereby.  The  value  of 
gold  can  thus  be  realized  in  no  way  other  than  in  the  purchase  and  dis- 
tribution of  consumable  wealth;  unless  so  used,  the  value  of  gold  as  a 
factor  in  commerce,  seems  to  be  non-existent.  Nor  does  it  apparently, 
make  the  slightest  difference  whether  the  goods  purchased  with  a  nation's 
gold  are  of  a  durable  nature  or  not:  the  amount  of  annual  wealth  pro- 
duced by  a  nation  seems,  to  borrow  an  illustration  from  Smith,  no  more 
dependent  upon  the  amount  of  gold  within  its  territory  at  any  given 
time,  than  the  amount  of  its  food  depends  upon  the  tin  pans  or  hardware 
it  might  possess  at  any  moment. 

There  is,  apparently,  in  the  laws  of  nature  no  more  reason  to  sup- 
pose that  the  food  supply  of  a  nation  can  be  increased  by  accum- 
ulating tin,  than  that  its  wealth  can  be  increased  by  piling  up 
gold.  If  a  nation  produces  the  food  supply,  the  tin  necessary  for  its 
distribution  may  be  allowed  to  take  care  of  itself;  and  so,  the  annual 
wealth  a  nation  creates  will  attract  all  the  gold  necessary  for  its  dis- 
tribution, simply  through  its  existence.  There  is,  seemingly,  no  more 
use  in  collecting  tin,  in  order  to  increase  food,  than  in  collecting  gold, 
in  order  to  increase  wealth ;  the  value  of  tin  is  dependent  upon  the 
use  to  which  it  may  be  put,  which,  in  the  present  case,  depends  upon 
the  food  supply.  The  value  of  gold  is  fixed  in  the  same  way:  by  its 
use,  and  is  dependent  upon  the  annual  production  of  consumable 
wealth. 

Speaking  of  the  number  of  pots  and  pans  in  a  country,  Adam  Smith* 

» Ibid..  Bit.  IV.,  ch.  i.,  pp.  12.  13. 


Bk.I  First  Principles  of  Protection  9 

says:  "But  it  readily  occurs  that  the  number  of  such  utensils  is  in 
every  country  necessarily  limited  by  the  use  which  there  is  for  them; 
that  it  would  be  absurd  to  have  more  pots  and  pans  than  were  necessary 
for  cooking  the  victuals  usually  consumed  there;  and  that  if  the  quan- 
tity of  victuals  were  to  increase,  the  number  of  pots  and  pans  would 
readily  increase  along  with  it,  a  part  of  the  increased  quantity  of  vict- 
uals being  employed  in  purchasing  them,  or  in  maintaining  an  additional 
number  of  workmen  whose  business  it  was  to  make  them.  It  should 
as  readily  occur  that  the  quantity  of  gold  and  silver  is  in  every  country 
limited  by  the  use  which  there  is  for  those  metals;  that  their  use  con- 
sists in  circulating  commodities  as  coin,  and  in  affording  a  species  of 
household  furniture  as  plate;  that  the  quantity  of  coin  in  every  country 
is  regulated  by  the  value  of  the  commodities  which  are  to  be  circulated 
by  it:  increase  the  value,  and  immediately  a  part  of  it  will  be  sent  abroad 
to  purchase,  wherever  it  is  to  be  had,  the  additional  quantity  of  coin 
requisite  for  circulating  them:  that  the  quantity  of  plate  is  regulated  by 
the  number  and  wealth  of  those  private  families  who  choose  to  indulge 
themselves  in  that  sort  of  magnificence:  increase  the  number  and  wealth 
of  such  families,  and  a  part  of  this  increased  wealth  will  most  probably  be 
employed  in  purchasing,  wherever  it  is  to  be  found,  an  additional  quan- 
tity of  plate:  that  to  attempt  to  increase  the  wealth  of  any  country, 
either  by  introducing  or  by  detaining  in  it  an  unnecessary  quantity  of 
gold  and  silver,  is  as  absurd  as  it  would  be  to  attempt  to  increase  the 
good  cheer  of  private  families,  by  obliging  them  to  keep  an  unnecessary 
number  of  kitchen  utensils." 

These  considerations  are  not  in  harmony  with  the  balance  of  trade 
theory.  Facts,  however,  seem  to  support  them.  If,  for  instance,  gold 
were  the  controlling  factor  in  the  creation  of  wealth,  the  nations  produc- 
ing the  greatest  quantity  of  gold  would  be  the  richest  and  most  powerful 
nations.  If  such  were  the  case,  Spain  and  Portugal  would  be  the  most 
richly  endowed  of  European  countries,  while  others,  less  well  supplied 
with  mines,  would  have  to  content  themselves  with  being  commercial 
dependencies.  England  has  produced  relatively  little  or  no  gold,  and  for 
the  past  half  century  has  ignored  the  balance  of  trade  philosophy;  it  can, 
however,  scarcely  be  maintained  that  England  has,  in  consequence,  been 
placed  at  disadvantage  with  Spain  and  Portugal;  either  with  reference 
to  material  wealth,  worldly  power,  or  the  possession  of  pure  bullion. 

Again,  history  demonstrates  that  the  accumulation  of  gold  or  the 
monetary  metals,  within  a  nation's  boimdaries,  has  little  or  no  effect  upon 


lo  The  Old  Protection  Pt.  I 

the  nation's  natural  resources,  which  constitute  the  real  basis  of  its 
wealth;  that  even  long  and  expensive  wars  may  be  carried  on  inde- 
pendently of  the  amount  of  gold  or  money  in  its  possession:  that  here, 
as  ever,  a  country's  productive  energy  and  territorial  resources  consti- 
tute its  real  wealth,  which  may  be  drawn  upon  irrespective  of  this  or 
that  amount  of  gold  in  circulation  at  any  given  time.  An  interesting 
illustration  of  this  position  is  presented  in  The  Wealth  of  Nations :  ^ 
**The  last  French  war  cost  Great  Britain  upward  of  ninety  millions, 
including  not  only  the  seventy-five  millions  of  new  debt  that  was  con- 
tracted, but  the  additional  two  shillings  in  the  pound  land-tax,  and  what 
was  annually  borrowed  of  the  sinking  fund.  More  than  two  thirds  of 
this  expense  was  laid  out  in  foreign  countries;  in  Germany,  Portugal, 
America,  in  the  ports  of  the  Mediterranean,  in  the  East  and  the  West 
Indies.  The  kings  of  England  had  no  accumulated  treasure.  We  never 
hear  of  any  extraordinary  quantity  of  plate  being  melted  down.  The 
circulating  gold  and  silver  of  the  country  had  not  been  supposed  to  exceed 
eighteen  millions.  Since  the  late  re-coinage  of  the  gold,  however,  it 
is  believed  to  have  been  a  good  deal  underrated.  Let  us  suppose, 
therefore,  according  to  the  most  exaggerated  computation  which  I 
remember  to  have  either  seen  or  heard  of,  that,  gold  and  silver  to- 
gether, it  amounted  to  thirty  millions.  Had  the  war  been  carried  on 
by  means  of  our  money,  the  whole  of  it  must,  even  according  to  this 
computation,  have  been  sent  out  and  returned  again  at  least  twice  in 
a  period  of  between  six  and  seven  years.  Should  this  be  supposed,  it 
would  afford  the  most  decisive  argument  to  demonstrate  how  unneces- 
sary it  is  for  Government  to  watch  over  the  preservation  of  money,  since 
upon  this  supposition  the  whole  money  of  the  country  must  have  gone 
from  it  and  returned  to  it  again,  two  different  times  in  so  short  a  period, 
without  anybody's  knowing  anything  of  the  matter." 

This  is  one  of  the  most  striking  statements  in  economic  thought  of  the 
fact  that  international  exchange  is  not  carried  on  with  money.  It 
shows  that  international  trade  is  carried  on  through  the  exchange  of 
commodities,  and  that  the  actual  amount  of  money  changing  hands  in 
such  trade  is  an  almost  negligible  quantity,  as  concerns  the  national 
production  and  distribution  of  wealth. 

Daniel  Webster,^  speaking  of  the  balance  of  trade  theory,  said:  "The 


'  Bk.  IV.,  ch.  i.,  pp.   14,  IS- 

-  Speech  of  Daniel  Webster  upon  the  Tarif,  in  the  House  of  Representatives,  April  1  and  2,  1824. 
Taussig.    State  Papers  and  Speeches  on  the  Tariff,  p.  349, 


Bk.  I  First  Principles  of  Protection  li 

truth  is,  that  all  these  obsolete  and  exploded  notions  had  their  origin  in 
very  mistaken  ideas  of  the  true  nature  of  commerce.  Commerce  is  not  a 
gambling  among  nations  for  a  stake,  to  be  won  by  some  and  lost  by 
others.  It  has  not  the  tendency  necessarily  to  impoverish  one  of  the 
parties  of  it,  while  it  enriches  the  other;  all  parties  gain,  all  parties 
make  profits,  all  parties  grow  rich,  by  the  operations  of  just  and  liberal 
commerce.  .  .  We  have  reciprocal  wants  and  reciprocal  means  for 
gratifying  one  another's  wants.  This  is  the  true  origin  of  commerce, 
which  is  nothing  more  than  the  exchange  of  equivalents,  and  from  the 
rude  barter  of  its  primitive  state  to  the  refined  and  complex  conditions 
in  which  we  see  it,  its  principle  is  uniformly  the  same;  its  only  object 
being,  in  every  stage,  to  produce  that  exchange  of  commodities  between 
individuals,  and  between  nations,  which  shall  conduce  to  the  advantage 
and  to  the  happiness  of  both.  Commerce  between  nations  has  the 
same  essential  character  as  commerce  between  individuals,  or  between 
parts  of  the  same  nation.  Cannot  two  individuals  make  an  interchange 
of  commodities  which  shall  prove  beneficial  to  both,  or  in  which  the 
balance  of  trade  shall  be  in  favor  of  both?  If  not,  the  tailor  and  the 
shoemaker,  the  farmer  and  the  smith,  have  hitherto  very  much  mis- 
understood their  own  interest.  And  with  regard  to  the  internal  trade  of 
a  country,  in  which  the  same  rule  would  apply  as  between  nations,  do 
we  ever  speak  of  such  an  intercourse  being  prejudicial  to  one  side  because 
it  is  useful  to  the  other?  Do  we  ever  hear  that,  because  the  intercourse 
between  New  York  and  Albany  is  advantageous  to  one  of  these  places, 
it  must  therefore  be  ruinous  to  the  other? " 

Webster  quotes  Mr.  Huskisson,  President  of  the  English  Board  of 
Trade  of  that  day,  as  follows:  "  'There  is  no  political  question  on  which 
the  prevalence  of  false  principles  is  so  general  as  in  what  relates  to  the 
nature  of  commerce  and  to  the  pretended  balance  of  trade;  and  there 
are  few  which  have  led  to  a  greater  number  of  practical  mistakes,  at- 
tended with  consequences  extensively  prejudical  to  the  happiness  of 
mankind.  In  this  country  our  parliamentary  proceedings,  our  public 
documents,  and  the  works  of  several  able  and  popular  writers  have 
combined  to  propagate  the  impression  that  we  are  indebted  for  much 
of  our  riches  to  what  is  called  the  balance  of  trade.  .  .  Our  true  policy 
would  surely  be  to  profess,  as  the  object  and  guide  of  our  commercial 
system,  that  which  every  man  who  has  studied  the  subject  must  know  to 
be  the  true  principle  of  commerce  —  the  interchange  of  reciprocal  and 
equivalent  benefit.     We  may  rest  assured  that  it  is  not  in  the  nature  of 


12  The  Old  Protection  Pt.  I 

commerce  to  enrich  one  party  at  the  expense  of  the  other.  This  is  a 
purpose  at  which,  if  it  were  practicable,  we  ought  not  to  aim;  and  which, 
if  we  aimed  at,  we  could  not  accomplish.'" 

The  foregoing  considerations,  may  bring  the  two  following  proposi- 
tions within  the  bounds  of  reasonable  acceptance:  (i)  That  gold  and 
wealth  are  not  the  same  things;  (2)  that  commerce  is  carried  on  between 
nations  by  means  of  the  exchange  of  commodities.  With  these  funda- 
mental conceptions  in  mind,  a  few  of  the  arguments  usually  offered 
in  aid  of  the  balance  of  trade  theory  may  be  examined. 

Mention  has  been  made  of  the  supposed  support  of  the  balance  of 
trade  in  the  analogy  between  the  affairs  of  a  nation  and  those  of  an 
individual.  It  is  said  that  a  merchant's  sales  are  comparable  to 
the  exports  of  a  nation;  if  the  value  of  the  merchant's  sales  (exports) 
is  greater  than  that  of  his  purchases  (imports),  his  affairs  are  in  a 
satisfactory  condition;  and,  it  is  concluded,  a  nation's  policy  should 
be  guided  by  the  same  principles.  In  other  words,  that  the  import 
duty  should  be  used  to  check  the  excess  of  imports  (purchases)  over 
exports  (sales). 

It  is  evident  that  the  trade  of  nations  is  composed  of  exchanges 
effected  by  individuals;  a  typical  transaction  may  be  followed.  A  mer- 
chant sends  a  ship  abroad,  with  a  cargo  for  sale;  the  vessel  may  return 
laden  with  goods  alone,  gold  alone,  or  with  goods  and  an  amount  in 
gold.  It  is  evident  that  the  profits  of  the  voyage  are  in  no  sense  depend- 
ent upon  this  amount  in  gold;  they  are,  on  the  contrary,  directly  depend- 
ent upon  the  total  relative  value  of  the  return  cargo,  whether  consisting 
of  goods,  gold,  or  any  combination  of  these.  In  other  words,  the  greater 
the  value  of  the  total  return  cargo  (imports)  in  relation  to  the  outgoing 
cargo  (exports)  the  greater  will  be  the  profits  of  the  voyage.  This 
position  requires  little  demonstration  and  suggests  that  no  analogy  exists 
between  the  exports  of  a  nation  and  the  amount  of  sales  of  a  merchant, 
the  confusion  of  ideas  being  due  to  the  introduction  of  money  in  one 
instance  and  not  in  the  other.  Trade  is  the  exchange  of  commodities; 
money  the  instrument  by  means  of  which  the  trade  is  effected:  the 
means  and  not  the  end.  The  trade  is  incomplete  until  the  money 
obtained  on  one  hand  is  laid  out  on  another. 

A  man  whose  wealth  consists  entirely  in  land  and  cattle  may  again  be 
considered.  If  he  begins  to  sell  cattle  for  gold,  he  will  create  a  favourable 
balance  of  trade;  if  he  sells  all  his  cattle,  this  balance  will  reach  a 
maximum,  but  the  man  will  cease  to  exist  as  a  factor  in  production  in 


Bk.  I  First  Principles  of  Protection  13 

proportion  to  the  decrease  of  his  herds.  If  he  invests  his  gold  in  the 
purchase  of  horses,  the  balance  of  trade  will  run  hopelessly  against 
him  until  he  is  "drained";  but  he  will  begin  to  produce  once  more  in 
proportion  to  the  outflow  of  his  gold.  If  the  horses  are  worth  more 
than  the  cattle,  he  has  made  a  net  gain.  If  he  had  gradually  invested 
in  horses,  during  the  sale  of  his  cattle,  his  balance  of  trade  would  have 
fallen  off,  and  would  have  run  against  him,  while  his  wealth  was  increas- 
ing. If  the  horses  are  worth  less  than  the  cattle,  he  might  have  had  a 
large,  favourable  balance  of  gold  during  the  entire  transaction,  and  end 
with  a  heavy  loss.  His  profits  depend  upon  the  total  relative  value  of 
his  horses  and  cattle;  not  upon  momentary  gold  balances.  If  his  ex- 
ported cattle  are  worth  more  than  his  imported  horses,  he  has  lost.  There 
thus  seems  to  be  no  analogy  between  a  nation's  exports,  and  the  gold  a 
man  receives  for  his  goods;  such  analogy  exists,  however,  between  na- 
tional exports  and  money  laid  out  in  stock;  between  imports  and  money 
received.  Again,  goods  traded  may  be  compared  to  exports,  and  goods 
received  to  imports,  and  if  the  latter  do  not  exceed  the  former  in  value, 
the  trade  is  not  profitable. 

The  man  who  sells  goods  for  money  is  not  yet  paid,  nor  has  he  been, 
until  the  money  is  used  in  the  purchase  of  other  goods,  and  upon  the 
relative  value  of  these  depend  the  profits  of  the  transaction;  that  is, 
upon  the  excess  of  the  value  of  his  imports  over  that  of  his  exports. 
These  considerations  maybe  applied  to  exchange  in  general,  and  lead  to 
the  conclusion  that  the  balance  of  trade  has  little  or  nothing  to  do  with 
the  profits  or  losses  involved  in  international  commerce.  It  seems  that 
a  nation  is  in  the  same  position  commercially  as  the  individual  merchant, 
and  that  the  factor  which  constitutes  the  national  profits  is  the  surplus 
value,  to  the  nation  considered,  of  the  goods  it  receives  (imports)  over 
the  value  of  the  goods  it  sends  away  (exports).  The  greater  the  relative 
value  of  its  imports,  or  what  it  receives,  the  greater  will  be  the  value  of 
its  trade,  or  profits.  Nor  need  the  question  be  confused  by  the  intro- 
duction of  money.  Gold  is  but  a  commodity  in  international  exchange; 
it  forms  the  international  money  and  circulates  as  bullion,  at  its  com- 
modity value,  in  relation  to  other  commodities.  Gold,  therefore,  in 
international  trade,  constitutes  an  import  or  an  export,  as  the  case  may 
be,  and  the  proportion  it  may  bear  to  these  at  any  given  moment  has  no 
connexion  with  the  profits  of  the  commerce  involved. 

Commerce  between  nations  is  thus  the  same  thing  as  barter  between 
individuals:  the  exchange  of  commercial  equivalents;  and  a  nation  no 


14  The  Old  Protection        *  Pt.  I 

more  hands  over  a  "balance"  in  money  to  another  nation,  for  which  it 
has  not  received  an  equivalent  return,  than  a  merchant  is  likdy  to  adopt 
such  a  course.  If,  then,  international  trade  is  the  exchange  of  (Equivalent 
values,  no  nation  can  gain  anything  by  checking  the  value  of  its  im- 
ports, in  order  to  influence  the  balance  of  trade.  If  commerce  is  the 
exchange  of  commercial  equivalents,  the  checking  of  imports  will  check 
commerce,  lose  the  advantages  of  exchange  to  the  nations  involved,  and 
produce  no  other  result. 

There  is  another  form  of  the  balance  of  trade  theory  using  the  import 
duty,  not  to  draw  money  toward  a  country,  but  to  keep  money  already 
in  a  country  from  seeking  a  foreign  outlet  through  normal  exchange. 
This  position  is  usually  stated  in  some  such  form  as  the  following:  If 
there  is  a  demand  for  $ioo  worth  of  iron  in  America,  and  the  iron  is 
bought  in  England,  America  is  supposed  to  have  gained  the  iron,  but 
to  have  lost  the  $ioo.  On  the  other  hand,  if  America  produces  the  iron 
for  herself,  although  it  may  cost  $i  lo,  she  obtains  the  iron  and  keeps 
the  money  as  well  —  net  gain  for  America  of  $qo.  This  position,  of 
course,  supposes  that  all  imports  are  purchased  with  money  alone. 
This,  as  has  been  shown,  seems  not  to  be  the  case;  exports  pay  for  im- 
ports, and  unless  the  money  sent  to  England  is  buried  in  the  ground,  it 
implies  a  Hke  amount  of  English  money  spent  on  American  goods.  If 
so,  America  has  lost  $io  in  increased  price,  and  destroyed  a  potential 
trade  to  the  extent  of  $ioo. 

It  may  be  said,  however,  that  money  sent  to  England  need  not  return 
to  America,  but  seek  an  outlet  in  other  countries.  In  this  case,  it  seems 
that  France  or  Germany  completes  the  exchange  with  America;  condi- 
tions remaining  the  same.  If  it  is  supposed  that  the  money  need  not  come 
back  to  America  at  all,  the  existence  is  implied  of  a  country  producing 
nothing  other  coimtries  buy.  Such  a  country  evidently  could  not  exist 
commercially;  but  if  such  existence  is  admitted,  it  could  apparently 
gain  nothing  by  the  imposition  of  import  duties,  in  order  to  prevent  its 
money  seeking  a  foreign  outlet.  Such  a  nation  is  simply  taxing  itself 
in  order  to  pay  $io  interest  on  every  $ioo  worth  of  iron  it  produces; 
which,  as  the  iron  is  produced  and  consumed,  must  soon  amount  to  a 
usurious  rate. 

Such  a  policy  is  more  or  less  analogous  to  that  of  a  manufacturer  who 
pays  a  heavy  interest  charge  on  funds  employed  in  producing  goods 
which  cost  him  more  than  their  market  value.  He  pays  out  money  in 
order  to  obtain  funds  which  cost  still  more  money  to  employ.     More- 


Bk.  I  First  Principles  of  Protection  15 

over,  a  nation  taxing  imports,  in  order  to  keep  money  in  the  country, 
taxes  only  that  portion  of  the  population  coming  in  contact  with  the 
tax  through  consumption;  that  is,  imposes  an  unequal  tax  burden.  If 
the  economic  advantage  of  keeping  money  in  a  country  is  granted,  it  is 
obvious  that  import  duties  are  not  the  only  means  which  may  be  em- 
ployed. A  country  can  keep  any  given  amoimt  of  money  within 
its  boundaries  by  subsidies,  bounties,  or  the  issue  of  its  debentures. 
In  the  last  case,  it  can  hold  any  amount  desired  at  no  higher  rate 
than  the  market  price  of  its  securities,  know  exactly  at  any  time  how 
much  the  money  costs  to  hold,  cease  the  expenditure  when  convenient, 
and  at  the  same  time  impose  an  equal,  in  place  of  an  unequal,  tax  burden. 

The  arguments  in  favour  of  the  imposition  of  import  duties,  as  affect- 
ing the  balance  of  trade,  or  in  order  to  keep  money  in  a  country,  seem  to 
involve  the  two  suppositions  discussed:  first,  that  gold  is  wealth,  and 
desirable  independently  of  any  use  to  which  it  may  be  put  in  the 
channels  of  trade;  second,  that  international  trade  is  something  othei 
than  the  exchange  of  equivalents,  whether  expressed  in  gold  or  other 
commodities. 

The  balance  of  trade  theory  depends  upon  the  idea  that  commerce 
between  nations  involves  a  mysterious  quantity  of  floating  money,  irre- 
spective of  the  goods  exchanged:  a  balance  which  may  be  caught  like  a 
butterfly  by  the  nation  weaving  the  cleverest  network  of  indirect  taxes. 

This  idea  has  been  regarded  as  an  "exploded  notion"  by  the  best  minds 
on  both  sides  of  the  Atlantic  for  generations.  In  spite  of  this  fact, 
however,  the  balance  of  trade  theory  exerts  a  great  influence  over  nearly 
all  national  policies,  and  forms  one  of  the  cornerstones  of  modern  fiscal 
structures.  It  is  constantly  met  in  practical  American  politics,  where  it 
is  rarely  discussed  but  is  accepted,  like  the  gravitation  of  matter,  as  a 
fundamental  truth  requiring  no  demonstration. 

The  balance  of  trade  theory  may  always  be  put  to  the  crude  but  effec- 
tive test  of  bullion  returns.  If  the  balance  of  trade  theory  is  in  harmony 
with  the  facts,  a  country  which  imposes  no  import  duties  with  reference 
to  it,  will  be  in  danger  of  losing  its  capital. 

Wherever  protective  taxes  exist,  it  may  be  said  that  they  exert  a  cer- 
tain influence  over  the  balance  of  trade.  England,  for  more  than  half 
a  century,  has  not  only  ignored  the  balance  of  trade,  but  imposed  no 
protective  taxation.  England  is,  consequently,  the  one  country  in  the 
world  most  exposed  to  the  danger  of  being  "drained"  of  her  money  supply 
which  will  flow  away  from  her  toward  those  countries  holding  a  network 


i6  The  Old  Protection  Pt.  I 

of  import  duties,  ready  to  catch  the  balance  of  trade.  This  is  a  prev- 
alent opinion.  "Only  last  year,"  says  Mr.  Chiozza-Money, ^  writing 
in  1903,  "we  had  Mr.  Seddon  telling  a  British  audience  that  every 
year  we  sent  away  over  sea  160,000,000  golden  sovereigns  to  pay  for  our 
balance  of  trade." 

The  method  of  estimating  the  balance  of  trade  is  simple.  The  total 
value  of  imports  and  exports  are  compared:  if  imports  are  greater  than 
exports,  the  difference  is  supposed  to  represent  money  sent  out  of  the 
country.  The  Statistical  Abstract  of  the  United  Kingdom  shows  the 
following  returns  for  1902: 

Imports  (values  c.  i.  f.  )  P-  91 £528,391,000 

Exports  (values  f.  o.  b.)  p.  129 283,424,000 

£244,967,000 
From  which  should  be  deducted  goods  previously  imported  (values 

f.  o.  b.)  p.  133 65,815,000 


Excess  of  total  imports  over  exports  £179,152,000 

It  is  evident,  upon  the  theory  of  the  balance  of  trade,  that  in  1902 
England  must  have  sent  away  in  gold  $179,152,000  in  order  to  pay  for 
this  unfavourable  balance.  Here  is  where  the  Premier  of  New  Zealand 
found  his  160,000,000  "golden  sovereigns."  In  other  words,  if  this 
theory  is  in  harmony  with  the  facts,  the  bullion  returns  of  the  United 
Kingdom  for  1902  must  show  £179,152,000  excess  of  bullion  exported 
over  bullion  imported. 

In  the  Statistical  Abstract,  the  following  items  appear  with  reference 
to  bullion  and  specie: 

Imports,  p.  149 £31,393,345 

Exports,  p.  155 26,125,206 


£  5,268,139 


Thus,  where  nearly  £180,000,000  against  England  are  expected,  over 
£5,000,000  in  her  favour  are  found,  showing  some  discrepancy  between 
the  balance  of  trade  theory  and  "the  facts." 

There  is,  however,  no  difficulty  in  tracing  the  millions  of  sovereigns 
which  seem  to  have  melted  into  space.  International  trade  is  barter, 
but  services  may  be  exchanged  as  well  as  goods.  "Just  as  a  barrister," 
says  Mr.  Chiozza-Money,  "may  import  goods  value  £10,000  a  year 
without  exporting  goods,  giving  his  services  in  exchange,  so  a  nation 

'  Through  Preference  to  Protection,  p.  29. 


Bk.  I  First  Principles  of  Protection  17 

may  pay  for  a  great  part,  or  even  the  whole  of  its  imports,  by  giving 
services  in  exchange  for  commodities  sent  it  by  other  nations."  The 
subject  is  interestingly  and  exhaustively  discussed,  in  relation  to  existing 
conditions,  in  the  essay  cited,  from  which  the  foregoing  comparison  is 
taken. 

The  theory  of  the  balance  of  trade  is  one  of  the  many  relics  of  the  old 
Mercantile  System,  so  long  dominant  in  Europe.  When  governments 
found  they  were  impotent  to  keep  gold  from  seeking  the  most  profitable 
market,  and  that  its  exportation  was  not  an  economic  evil,  they  devoted 
their  attention  to  "regulating  the  balance  of  trade"  rather  than  to  the 
prevention  of  the  export  of  gold  and  silver.  '*  From  one  fruitless  care  it 
was  turned  away  to  another  care,"  says  Adam  Smith, ^  "much  more 
intricate,  much  more  embarrassing,  and  just  equally  fruitless." 

The  opinion  that  gold  and  wealth  are  the  same  things,  together  with 
the  balance  of  trade  theory,  have  been  discussed  for  two  reasons:  first, 
because  they  lie  at  the  "head  of  the  corner"  of  modern  Protection;  and 
second,  in  order  to  present  grounds  for  a  reasonable  acceptance  in 
economic  discussion  of  the  two  following  positions: 

1.  Gold,  or  money,  should  never  be  confused  with  general  wealth. 

2.  International  exchange  may  be  expressed  in  terms  of  commod- 

ities, independently  of  money;  that  is,  represents  an  exchange 
of  equivalents. 
The  balance  of  trade  theory  may  be  left  with  a  citation  from  Mill  -.^ 
"The  principle  of  the  Mercantile  Theory  is  now  given  up  even  by  writers 
and  governments  who  still  cling  to  the  restrictive  system.  Whatever 
hold  that  system  has  over  men's  minds,  independently  of  the  private 
interests  exposed  to  real  or  apprehended  loss  by  its  abandonment,  is 
derived  from  fallacies  other  than  the  old  notion  of  the  benefits  of  heaping 
up  money  in  the  country.  The  most  effective  of  these  is  the  specious 
plea  of  employing  our  own  countrymen  and  our  own  national  industry, 
instead  of  feeding  and  supporting  the  industry  of  foreigners." 


»  The  Wealth  of  Nations,  Bk.  IV.,  ch.  !.,  p.  7. 

*  Principles  of  Political  Economy,  Bk.  V.,  ch.x.,  5i.  P-  S54- 


CHAPTER  II 


GENERAL   PROTECTION 


Section  I — Protection  and  Capital.    Section  II — The  Infant  In- 
dustry.   Section  III — Protection  of  Industry. 


Section  I  — Protection  and  Capital 

THE  import  duty,  adopted  under  the  Mercantile  System  and 
the  balance  of  trade,  possessed  a  number  of  potentialities, 
among  the  most  important  of  which,  through  its  effect  upon 
prices,  was  the  opportunity  of  employing  labour  and  capital 
in  industry  otherwise  neither  profitable  nor  possible.  The  import  duty 
thus  gradually  took  upon  itself  a  new  function,  and,  where  aban- 
doned or  neglected  as  a  means  of  influencing  the  balance  of  trade,  was 
welcomed  and  supported  as  a  means  of  establishing  industry  and  em- 
ploying labour. 

General  Protection,  or  the  policy  of  taxing  foreign  commodities  in 
order  to  hold  the  home  market  for  the  home  producer,  is  among  the  most 
obvious  of  all  economic  policies.  When  it  is  urged,  in  favour  of  the 
protective  import  duty,  that  it  can  bring  industries  into  existence,  not 
otherwise  possible,  such  industries  may  be  pointed  out  in  operation: 
when  the  duty  is  advanced  as  an  employer  of  labour,  the  payrolls  of 
such  industries  are  sufficient  demonstration  of  the  truth  of  the  state- 
ment. A  statute  passed,  a  duty  fixed:  a  definite,  economic  result  is 
obtained.  If  the  statute  were  not  passed,  the  duty  not  established, 
trade  would  be  left  to  follow  its  normal  course,  and  there  would  be  no 
evident  and  immediate  artificial  consequences. 

If,  upon  general  principles,  it  is  said  that  the  use  of  stimulants  is  not 
always  to  be  encouraged,  few  will  contradict  the  statement  as  mere 
theory;  and  advance  a  number  of  facts  in  order  to  refute  the  principle 
and  establish  the  opposed  position:  that  stimulants  are  invariably 
beneficial.  The  reason  is,  that  the  science  of  medical  experience  has 
established  the  first  statement  as  a  general  principle,  based  upon  a 


Bk.  I  General  Protection  19 

wider  knowledge  of  a  greater  number  of  systematized  facts  than  may 
be  presented  upon  the  other  side. 

There  exists  such  a  generalization  applied  to  the  economic  questions 
of  this  phase  of  Protection.  This  generalization  is  based  upon  the 
position,  supported  by  endless  facts,  that  the  number  of  workmen 
which  any  given  individual  may  employ  must  bear  a  fixed  relation  to 
his  capital;  in  other  words,  that  no  man  can  employ  a  greater  number 
of  workmen  than  his  capital  will  allow.  If  this  is  so,  it  follows  that 
the  number  of  workmen  which  may  be  employed  by  any  given  number 
of  men,  or  by  a  society,  must  bear  a  definite  relation  to  their  com- 
bined capital,  or  to  the  total  amount  of  capital  within  the  society; 
and  can  never  exceed  it.  "The  general  industry  of  the  society,"  says 
Adam  Smith, ^  "never  can  exceed  what  the  capital  of  the  society  can 
employ.  As  the  number  of  workmen  that  can  be  kept  in  employ- 
ment by  any  particular  person  must  bear  a  certain  proportion  to  his 
capital,  so  the  number  of  those  who  can  be  continually  employed  by 
all  the  members  of  a  great  society,  must  bear  a  certain  proportion  to 
the  whole  capital  of  that  society,  and  can  never  exceed  that  proportion. 
No  regulation  of  commerce  can  increase  the  quantity  of  industry  in 
any  society  beyond  what  its  capital  can  maintain.  It  can  only  divert  a 
part  of  it  into  a  direction  into  which  it  might  not  otherwise  have  gone; 
and  it  is  by  no  means  certain  that  this  artificial  direction  is  likely  to 
be  more  advantageous  to  the  society  than  that  into  which  it  would 
have  gone  of  its  own  accord." 

When  the  direct  bearing  of  this  position  upon  protective  legislation 
is  understood,  it  seems  evident  that  such  legislation  can  no  more 
increase  the  total  general  industry  of  a  country,  or  the  labour  em- 
ployed, than  it  can  increase  its  amount  of  capital;  and  it  is  difficult 
to  believe  that  the  mere  imposition  of  an  import  duty  can  bring 
capital  into  existence.  If  this  were  so,  if  import  duties  created 
capital,  the  richest  nations  would  be  those  with  the  greatest  number 
of  such  duties,  and  their  capital  limited  only  by  the  available  quan- 
tity of  paper,  ink,  and  legislative  enactments.  It  is  evident,  however? 
that  protective  duties  can  only  affect  capital  already  in  existence, 
and  do  not  increase  its  amount.  As  such  taxes  can  only  affect  exist- 
ing capital  through  restricting  trade,  the  restriction  or  prohibition  of 
normal  trade  is  the  essence  of  the  protective  system.     Mill^  uses  the 

»  The  Wealth  of  Nations,  Bk.  IV..  ch.  ii..  p.  25. 

'  Principles  of  Political  Economy,  Bk.  V.,  ch.  x.,  §  i,  p.  553. 


20  The  Old  Protection  Pt.  i 

terms  "restrictive"  and  "prohibitory"  as  more  characteristic  of  the 
principle  than  "protective." 

The  restriction  of  trade,  then,  is  the  only  means  by  which  the  pro- 
tective system  can  act  upon  capital  or  industry;  and  the  assumption 
that  the  capital  or  industry  of  any  country  can  be  increased  by  re- 
stricting or  prohibiting  its  trade  seems  questionable.  It  this  were  so, 
the  nations  with  the  greatest  capital  would  be  those  with  the  least 
trade.  Protection,  therefore,  can  apparently  never  increase  the  capital 
or  industry  of  a  nation.  Its  only  means  of  acting  upon  the  capital 
being  to  check  or  restrict  trade,  the  profits  or  increase  of  capital,  which 
might  be  gained  through  the  action  of  untrammelled  trade  and  industry, 
are  naturally  lost  in  proportion  to  the  amount  of  restriction  imposed 
by  protective  legislation. 

This  conception  has  not  been  without  results,  especially  in  England. 
Its  nature,  however,  is  so  general  that  its  application  may  be  lost  to 
view,  and  considerations  are  often  advanced  in  support  of  the  protec- 
tive theory  which  may  be  brought  under  this  comprehensive  principle. 
These  may,  therefore  be  examined. 

The  Protection  of  the  old  school  falls  under  two  distinct  policies: 
First,  the  protection  of  industry;  second,  the  protection  of  labour. 
An  analysis  of  the  first,  as  developed  in  the  usual  channels  of  discussion, 
permits  its  study  under  two  principal  divisions:  (i)  infant  industry; 
(2)  the  protection  of  industry. 

Section  II  —  The  Infant  Industry 

Among  the  most  important  contributions  to  the  literature  of  Protec- 
tion is  that  prepared  by  Alexander  Hamilton  at  the  request  of  the 
American  House  of  Representatives.  This  paper,  read  in  December, 
1 79 1,  is  entitled  A  Report  on  Manufactures,  and  from  its  sincerity  and 
ability  lends  stronger  support  to  many  of  the  considerations  advanced 
than  most  of  the  protectionist  literature  dated  before  or  since.  A  dis- 
cussion of  Protection  in  its  relation  to  industry  cannot  be  better  opened 
than  with  a  citation  from  this  document. 

"It  is  well  known — "  says  Hamilton, ^  "and  particular  examples  in  the 
course  of  this  report  will  be  cited  —  that  certain  nations  grant  bounties 
on  the  exportation  of  particular  commodities  to  enable  their  own  work- 
men to  undersell  and  supplant  all  competitors  in  the  countries  to  which 
these  commodities  are  sent.     Hence  the  undertakers  of  a  new  manu- 


*  Hamilton's  Report  on  Manufactures.     Stale  Papers  and  Speeches  on  the  Tarif.    Taussig,  p.  31. 


Bk.  I  General  Protection  21 

facture  have  to  contend  not  only  with  the  natural  disadvantages  of  a 
new  undertaking,  but  with  the  gratuities  and  remunerations  which 
other  governments  bestow.  To  be  enabled  to  contend  with  success, 
it  is  evident  that  the  interference  and  aid  of  their  own  governments 
are  indispensable." 

This  argument  in  favour  of  governmental  aid  in  the  establishment 
of  manufacturing  enterprise  has  become  a  classic  in  economic  discus- 
sion; it  is  known  as  the  argument  in  aid  of  "infant  industry."  In 
support  of  this  position,  Hamilton  and  the  later  protectionists  offer 
many  plausible  considerations  showing  the  advantages  of  govern- 
mental assistance  of  new  and  struggling  undertakings.  These  considera- 
tions are  regarded  as  especially  applicable  to  new  countries,  although 
applying  with  equal  force  to  any  new  industry  unable  to  compete  with 
the  foreign  producer. 

It  is  evident  that  the  initial  assistance,  or  temporary  support,  of 
industries  in  their  infancy,  does  not  involve  a  general  protective  policy; 
governmental  aid  is  suggested  in  this  sense  merely  in  order  to  help  the 
industry  upon  its  feet,  until  able  to  walk  alone.  The  first  difficulty 
met,  therefore,  is  to  discover  what  an  infant  industry  really  is.  The 
question  ofifers  scope  for  wide  difference  of  opinion;  experience  showing 
that  assistance  of  infant  undertakings  results  in  a  final  protective  system, 
owing  to  difficulty  in  distinguishing  "infant"  from  other  forms  of  indus- 
try, and  in  withdrawing  support  when  the  infant  period  is  passed. 
This  position  is  always  advanced,  however,  where  opportunity  exists, 
and  the  infant  industry  is  found  fully  established  among  the  prin- 
ciples of  the  New  Protection  in  England  and  Germany,  under  the  title 
of  "  productive  potentialities."  The  subject  may,  therefore,  be  reviewed 
in  some  detail,  especially  as  it  derives  importance  from  a  passage  in 
Mill's  Principles  of  Political  Economy.  This  passage  may  be  cited  as 
formulating  clearer  ideas  with  reference  to  infant  industry  than  the  less 
specific  considerations  of  Hamilton. 

"The  only  case, "  says  Mill,i  "in  which,  on  mere  principles  of  political 
economy,  protecting  duties  can  be  defensible,  is  when  they  are  imposed 
temporarily  (especially  in  a  young  and  rising  nation)  in  hopes  of  natural- 
izing a  foreign  industry,  in  itself  perfectly  suitable  to  the  circumstances 
of  the  country.  The  superiority  of  one  country  over  another  in  a  branch 
of  production,  often  arises  only  from  having  begun  it  sooner.  There 
may  be  no  inherent  advantage  on  one  part,  or  disadvantage  on  the 

'  Principles  of  Political  Economy.  Bk.  V.,  ch.  x.,  §  i,  p.  536. 


22  The  Old  Protection  Pt.  I 

other,  but  only  a  present  superiority  of  acquired  skill  and  experience. 
A  country  which  has  this  skill  and  experience  yet  to  acquire,  may,  in 
other  respects,  be  better  adapted  to  the  production  than  those  which 
were  earlier  in  the  field:  and  besides,  it  is  a  just  remark  of  Mr.  Rae, 
that  nothing  has  a  greater  tendency  to  promote  improvements  in 
any  branch  of  production  than  its  trial  under  a  new  set  of  conditions. 
But  it  cannot  be  expected  that  individuals  should,  at  their  own  risk, 
or  rather  to  their  certain  loss,  introduce  a  new  manufacture  and  bear 
the  burthen  of  carrying  it  on  until  the  producers  have  been  educated 
up  to  the  level  of  those  with  whom  the  processes  are  traditional. 
A  protecting  duty,  continued  for  a  reasonable  time,  will  sometimes 
be  the  least  inconvenient  mode  in  which  the  nation  can  tax  itself 
for  the  support  of  such  an  experiment.  But  the  protection  should  be 
confined  to  cases  in  which  there  is  good  ground  of  assurance  that  the 
industry  which  it  fosters  will  after  a  time  be  able  to  dispense  with  it; 
nor  should  the  domestic  producers  ever  be  allowed  to  expect  that  it 
will  be  continued  to  them  beyond  the  time  necessary  for  a  fair  trial  of 
what  they  are  capable  of  accomplishing." 

It  is  impossible  to  present  the  infant  industry  position  more  favour- 
ably or  with  greater  authority  than  in  these  passages  from  Hamilton 
and  Mill,  Other  considerations  from  the  pen  of  Mill  are  of  interest 
in  this  connexion.  The  adoption  of  Protection  in  Australia  is  said  to 
have  been  due  largely  to  the  influence  of  two  men  —  one  an  adminis- 
trator, the  other  an  economist:  Earl  Grey  and  J.  S.  Mill;  the  part 
played  by  the  latter  being,  perhaps,  more  important  than  that  of  the 
former.  The  policy  of  a  great  and  growing  country  was  thus  largely 
established  by  a  guarded  passage  in  the  works  of  a  man  formally  opposed 
to  the  principles  adopted  through  the  misinterpretation  of  his  opinion 
as  is  shown  in  the  following  extract^  from  a  letter  to  a  student  of  his 
works  in  Victoria: 

*Tt  is  a  great  compliment  to  me  that  my  supposed  opinions  should 
have  had  the  influence  you  ascribe  to  them  in  Australia.  But  there 
seems  to  have  been  a  considerable  degree  of  misunderstanding  as  to 
what  they  are.  The  fault  probably  lies  with  myself  in  not  having 
explained  them  sufficiently.  I  have  entered  rather  more  fully  into  the 
subject  in  the  new  editions  published  this  spring.  But,  not  to  give 
you  the  trouble  of  referring  to  them,  I  can  have  no  difficulty  in  saying 
that  I  never  for  a  moment  thought  of  recommending  or  countenancing 

'  J.  S.  Mill  in  Protection  in  Canada  and  Australasia.     Chomley,  p.  8i. 


Bk.  1  General  Protection  23 

in  a  new  Colony,  more  than  elsewhere,  a  general  protective  policy,  or 
a  system  of  duties  on  imported  commodities,  such  as  that  which  has 
recently  passed  the  representative  assembly  of  your  Colony.  What 
I  had  in  view  was  this:  If  there  is  some  particular  branch  of  industry, 
not  hitherto  carried  on  in  the  coimtry,  but  which  individuals  or  asso- 
ciations possessed  of  the  necessary  capital  are  ready  and  desirous  to 
naturalize,  and  if  these  persons  can  satisfy  the  Legislature  that,  after 
their  workpeople  are  fully  trained,  and  the  difficulties  of  the  first  intro- 
duction surmounted,  they  shall  probably  be  able  to  produce  the  article 
as  cheap,  or  cheaper,  than  the  price  at  which  it  can  be  imported,  but 
that  they  cannot  do  so  without  the  temporary  aid,  either  of  a  subsidy 
from  the  government,  or  of  a  protective  duty,  then  it  may  sometimes 
be  a  good  calculation,  for  the  future  interests  of  the  country,  to  make 
a  temporary  sacrifice,  by  granting  a  moderate  protecting  duty  for  a 
certain  limited  number  of  years,  say  ten,  or  at  the  very  most  twenty, 
during  the  latter  part  of  which  the  duty  should  be  on  a  gradually  di- 
minishing scale,  and  at  the  end  of  which  it  should  expire.  You  see  how 
far  this  doctrine  is  from  supporting  the  fabric  of  protectionist  doctrine 
in  behalf  of  which  its  aid  has  been  invoked. " 

The  conditions  upon  which  governmental  aid  may  sometimes  be 
advocated  with  reference  to  new  industry  may,  therefore,  be  formu- 
lated in  the  opinion  of  the  greatest  authority  cited  in  its  support: 

1.  When  the  aid  is  given  alone  to  start  the  industry. 

2.  When  the  industry  is  naturally  suited  to  the  country. 

3.  When  the  capital  is  at  hand,  and  the  only  difficulty  is  the  want 

of  skilled  labour  or  experience. 

4.  When  it  is  highly  probable  that  the  article  may  be  produced  as 

cheaply  or  more  cheaply  than  elsewhere. 

5.  When  the  duty  expires  after  a  period  of  not  longer  than  twenty 

years. 

A  glance  at  these  conditions,  and  the  passages  from  Mill  upon  which 
they  are  based,  may  show  that  they  present  no  foundations  for  the 
establishment  or  encouragement  of  a  general  protective  policy,  yet 
this  has  been  done  in  Australia,  and  is  being  done  to-day  wherever  this 
passage  in  Mill's  Principles  of  Political  Economy  is  used  as  an  induce- 
ment to  protective  taxation. 

There  is  apparently  but  one  reason  why  any  suitable  infant  industry 
should  not  be  able  to  start  upon  its  career  alone  and  unaided  —  lack  of 
^killed  labour.    Sufficiejjt  C9,pital  is,  of  course,  implied;  as  the  duty 


24  The  Old  Protection  Pt.  I 

could  not  create  the  capital.  The  existence  of  the  capital  granted, 
the  question  arises  whether  the  capital  could  not  import  the  necessary 
labour;  especially  as  experience  presents  innumerable  examples  of  such 
importations.  In  order,  therefore,  to  discover  any  genuine  infant 
industry,  it  is  essential  to  recognize  the  conditions  imposed  by  Mill; 
and,  at  the  same  time,  to  suppose  that  for  some  reason,  not  clear, 
the  skilled  labour  required  cannot  be  imported.  Such  being  the 
case,  the  infant  industry  is  compelled  to  enter  upon  a  period  of  trial, 
or  training. 

An  import  duty  can  apparently  be  of  no  use  to  the  industry  during 
such  a  period,  for  the  reason  that  the  industry  would,  ex  hypothesi, 
be  able  to  produce  nothing;  the  only  result  of  such  a  tax,  therefore, 
would  be  to  raise  the  price  of  the  commodity,  while  benefitting  no  one. 
All  such  periods  must  be  passed  at  the  expense  of  capital,  while  labour 
and  machinery  are  trying  their  wings.  It  seems,  therefore,  that  an 
import  duty  is  useless  in  the  actual  starting  of  an  industry  before  it 
can  produce  anything.  The  capital  at  hand,  the  labour  trained,  the 
experience  complete,  it  must  be  evident,  however,  that  there  is  still 
less  need  of  governmental  support  for  any  suitable  industry. 

In  order,  therefore,  to  discover  a  really  worthy  infant  industry,  it 
is  essential  to  add  another  condition  to  those  defined,  and  to  regard 
the  industry  as  entering  upon  a  transitory  period,  during  which  pro- 
duction is  carried  on  in  an  expensive  and  unsatisfactory  manner,  and 
to  suppose  the  import  duty  necessary  to  tide  over  such  a  period. 

If  an  import  duty  is  imposed  with  this  object  in  view,  it  will  in  all 
likelihood  bring  other  infant  industries  producing  the  same  article 
into  existence;  and  when  the  transition  period  of  one  is  drawing  to  a 
close,  the  analogous  period  of  another  may  be  but  half  over  or  be- 
ginning; which  process  must  result  either  in  the  establishment  of  fixed 
Protection  or  the  destruction  of  later  industries  by  the  removal  of  the 
duty.  Again,  the  import  duty  of  this  nature  is  sometimes  regarded 
as  a  reward  to  the  capitalist  who  has  risked  his  time  and  money  in 
the  creation  of  new  enterprise.  Considered  in  this  light,  it  seems  that 
the  import  duty  offers  but  a  poor  return,  so  far  as  the  establishment 
of  really  legitimate  industry  is  concerned.  If  profits  are  maintained 
by  means  of  the  duty,  other  industries  will  follow  and  reap  the  advan- 
tages created  for  the  first;  in  this  way  not  only  reducing  profits  and  the 
reward  of  the  capitalist,  but  rendering  it  impossible  to  remove  the  duty 
without  injury  to  the  series  of  later  industries.     Thus  the  following 


Bk.  I  General  Protection  25 

considerations  might  be  presented  with  reference  to  the  infant  industry 
of  the  Old  Protection: 

1.  The  import  duty  is  useless  in  starting  an  industry  before  it 

can  produce. 

2.  The  duty  is  useless  after  the  industry  is  in  operation,  if  the 

industry  is  suitable;  for  its  suitability  can  be  shown  only  by  its 
capacity  to  compete  with  other  producers. 

3.  If  the  duty  is  imposed  during  a  transition  period  of  poor  or 

expensive  production,  it  will  bring  other  industries  into  ex- 
istence, and  lead  to  definite  Protection. 

4.  The  duty  may  offer  an  unsatisfactory  reward  to  the  capitalist, 

in  allowing  competition  before  the  industry  is  fully  developed, 
thus  reducing  profits;  rendering  it  again  impossible  to  remove 
the  duty  without  endangering  all  the  industries  affected,  thus 
leading  again  to  definite  Protection. 

If  a  question  arises  with  reference  to  the  best  method  of  tiding  a 
really  suitable  and  struggling  industry  over  its  period  of  transition, 
and  at  the  same  time  rewarding  the  patriotic  innovator,  the  answer  is 
not  far  to  seek:  a  direct  bounty,  paid  in  proportion  to  the  amount  of 
labour  employed,  for  a  limited  period  upon  a  diminishing  scale,  appears 
to  meet  all  the  requirements  of  the  case;  avoid  the  cost  of  collecting  the 
duty  and  the  necessity  of  the  eventual  adoption  of  fixed  Protection.  A 
specific  subsidy,  paid  to  a  specific  industry  for  a  definite  time,  seems  to 
possess  all  the  advantages,  urged  in  favour  of  the  import  duty  in  this 
connexion  without  the  dangers  it  involves.  It  can  help  the  industry 
over  its  transitional  period;  demonstrate  whether  the  industry  is  in 
reality  suitable  or  not,  and,  by  eliminating  home  competition  until  the 
advantages  of  the  enterprise  are  definitely  demonstrated,  it  can  reward 
the  innovators  and  be  removed  at  the  proper  time  without  the  ruin  of  a 
chain  of  dependent  producers. 

A  few  passages  from  Hamilton's  Report'^  may  be  cited  in  reference  to 
bounties,  this  Report  being  in  many  ways  the  ablest  contribution  to  the 
literature  of  the  older  protectionist  school : 

"This  has  been  found  one  of  the  most  efficacious  means  of  encourag- 
ing manufactures,  and  it  is,  in  some  views,  the  best.  ...  Its 
advantages  are  these: 

I.  It  is  a  species  of  encouragement  more  positive  and  direct  than  any 
other,  and  for  that  very  reason  has  a  more  immediate  tendency  to 

'  Hamilton's  Report  on  Manufactures.     Taussig,  p.  64. 


26  The  Old  Protection  Pt.  I 

stimulate  and  uphold  new  enterprises,  increasing  the  chances  of  profit 
and  diminishing  the  risks  of  loss  in  the  first  attempts. 

2.  It  avoids  the  inconvenience  of  a  temporary  augmentation  of  price, 
which  is  incident  to  some  other  modes,  or  it  produces  it  to  a  less  degree, 
either  by  making  no  addition  to  the  charges  on  the  rival  foreign  article, 
as  in  the  case  of  protecting  duties,  or  by  making  a  smaller  addition.  .   .  . 

3.  Bounties  have  not,  like  high  protecting  duties,  a  tendency  to 
produce  scarcity.  An  increase  of  price  is  not  always  the  immediate, 
though  where  the  progress  of  a  domestic  manufacture  does  not  counter- 
act a  rise,  it  is  commonly  the  ultimate  effect  of  an  additional  duty. "... 

These  considerations  may  permit  the  formulation  of  the  following 
conclusions  with  reference  to  the  infant  industry: 

1.  Under  no  condition  is  the  imposition  of  an  import  duty  the  most 

advantageous  method  of  aiding  desirable  enterprise. 

2.  The  supposed  benefits  of  the  import   duty  may  be  obtained 

directly  by  means  of  a  subsidy. 

It  may  be  observed  that  the  infant  industry  position,  as  stated  by 
Mill,  overlooks  two  essential  conditions:  first,  that  the  lack  of  skilled 
labour  can  be  the  only  difl&culty  met  by  any  suitable  industry;  and, 
second,  that  such  labour  may  practically  always  be  imported  by  the 
capital  supposed  to  be  waiting  investment.  Again,  Mill  seems  to  over- 
look the  fact  that  any  encouragement  of  the  infant  industry  by  means 
of  an  import  duty  not  only  has,  but  always  must,  lead  to  definite  Pro- 
tection. ^  Later,  however,  this  led  Mill  to  abandon  the  infant  industry 
position.  2 

There  is  no  lack  of  specific  instance  to  which  reference  may  be  made 
in  support  of  the  foregoing  considerations.  Every  industry,  brought 
into  existence  within  any  free  trade  area,  in  competition  with  others,  is 
an  infant  industry  in  every  sense  of  the  word,  and  as  much  in  need 
of  protection  against  the  earlier  industries  as  though  they  were  on 
the  other  side  of  a  national  boundary.  The  fact  that  such  industries 
have  been  brought  into  successful  operation  in  every  country, 
seems  to  demonstrate  that  suitable  industries  are  independent  of  gov- 
ernmental support,  and  may  be  brought  into  being  through  the 
natural  action  of  economic  conditions;  nor  need  it  make  any  differ- 
ence, apparently,  whether  such  enterprise  is  protected  from  foreign 
competition  or  not,   the  most  important  competition  with  which  it 

*  An  interesting  and  more  detailed  discussion  of  the  subject  will  be  found  in  Facts  arid  Fallacies  of  Mod- 
ern Protection.     B.  R.  Wise. 
«  Cf.,  p.  62. 


Bk.  I  General  Protection  27 

has  to  deal  is  that  of  the  already  established  home  producer  within  the 
free  trade  area. 

There  exists  perhaps  no  more  marked  illustration  of  the  fact  that 
suitable  industry  may  come  into  being  and  establish  itself  without 
governmental  protection  than  may  be  derived  from  the  southern  states 
of  America.  After  the  Civil  War  these  states  were  left  in  an  exceptionally 
helpless  industrial  condition;  their  interests,  largely  agricultural,  were 
established  upon  slave  labour;  their  capital,  exhausted  in  war  and  in  the 
abandonment  of  slavery;  yet  this  impoverished,  agricultural  country  was 
exposed  to  the  merciless  competition  of  the  North  under  a  system  of  free 
trade  such  as  no  nation  has  seen.  The  result  upon  protectionist  principles 
must  have  been  industrial  prostration,  complete  and  unconditioned. 

"Little  more  than  half  a  generation  has  elapsed,"  says  Mr.  Atkinson, ^ 
"since  the  infant  industries  of  the  new  South  were  undertaken.  What 
are  the  present  conditions?  Pennsylvania  striving  by  the  adoption 
of  every  possible  improved  method  to  meet  the  competition  of  the  iron 
furnaces  of  Alabama.  New  England  trembling  lest  the  centre  of  the  tex- 
tile arts  shall  be  moved  from  Massachusetts  and  Rhode  Island  to  the 
Carolinas  and  Georgia.  The  wood-working  shops  of  the  middle  South 
competing  with  the  great  establishments  of  the  middle  West.  I  think 
I  need  make  no  further  rejoinder  to  Professor  Sedgwick's  plea  for  even 
temporary  protection  to  infant  industries.  Let  these  facts  speak  for 
themselves." 

In  the  works  of  the  earlier  protectionists,  attention  is  chiefly  occupied 
with  the  creation  of  industry;  they  offer  a  modest  and  apologetic  plea 
for  temporary  aid,  and  occasionally  seem  alive  to  the  evils  of  govern- 
mental interference  with  natural  economic  conditions.  They  bear  in 
mind  the  fact  that  the  ultimate  abandonment  of  the  duty  is  the  great 
desideratum  and  that  once  an  industry  has  been  fairly  tried  it  should  no 
longer  be  artificially  supported.  As  time  went  on,  however,  the  infant 
industries,  born  through  such  considerations,  began  to  grow  into  pros- 
perous middle  age.  It  became  necessary,  therefore,  to  look  about  for 
other  arguments  in  support  of  taxation  for  the  benefit  of  these  by  no 
means  struggling  undertakings.  The  creation  of  industry  thus  slipped 
into  the  background  and  the  maintenance  of  industry  took  its  place. 
Why,  it  was  asked,  limit  governmental  assistance  to  this  or  that  strug- 
gling enterprise?  Industry  itself  was  the  result  for  which  to  strive,  not 
any  special  kind  of  industry;  all  industry  should  be  encouraged  and 

^Address  be/ore  the  Economy  Club  of  London. 


28  The  Old  Protection  Pt.  I 

supported,  and  thus  governmental  aid  is  demanded  for  industry  in 
general. 

Section  III — Protection  or  Industry 
Article  i — Protectionist  Maxims. 

Industry  itself,  unqualified  and  unconditioned,  here  becomes  the 
basis  of  definite  Protection.  The  industries  of  a  country,  it  is  said,  are 
the  measure  of  its  wealth  and  productive  power.  By  means  of  industrial 
enterprise  and  initiative,  wealth  is  created  and  production  encouraged. 
This  offers  employment  to  labour,  maintains  wages  at  a  higher  level, 
increases  the  national  powers  of  consumption,  and  with  them,  the 
general  well-being  of  the  community.  All  these  advantages  may  be 
attributed  to  industry,  which  thus  becomes  the  object  of  attention,  and 
the  most  intelligent  administrative  policy  seems  that  most  effectively 
engaged  in  developing  the  existing  and  potential  resources  of  the  country. 

Thus,  whether  the  earlier  foundations  of  Protection  are  accepted  or 
not,  the  import  duty  remains  a  fruitful  heritage  and  grows  in  strength 
and  stature.  There  are  two  fundamental  maxims  of  the  orthodox 
protectionist  school  of  this  type: 

1.  That  the  import  duty  encourages  industry. 

2.  That  such  protected  industry  creates  a  demand  for  labour,  raises 
wages  and  thus  benefits  the  society. 

Protected  industry,  for  purposes  of  analysis,  may  be  divided  into  two 
classes:  the  industry  which  raises  price  and  the  industry  which  lowers 
price.  These  two  classes  include  all  protected  industry  of  the  kind  at 
present  under  discussion.  The  protective  import  duty  can  affect  indus- 
try through  price  alone;  it  can  moreover  affect  price  in  but  three  ways: 
(i)  by  raising  price  permanently;  (2)  by  lowering  price  permanently; 
(3)  by  affecting  price  temporarily.  If  the  duty  affects  price  through 
temporary  increase,  the  infant  industry  already  considered  appears. 
If  it  lowers  price  temporarily,  the  industry  falls  into  one  of  the  two  other 
classes  as  eventually  affected;  if  the  duty  has  no  effect  on  price,  it  of 
course  ceases  to  be  a  protective  measure.  It  seems,  therefore,  that  these 
two  classes  may  be  regarded  as  exhaustive. 

Article  2 — Protection  Which  Raises  Price. 

When  industry  itself  is  considered  as  an  advantage,  and  its  support 
advocated  through  governmental  aid  in  raising  price,  one  side  alone 
of  the  question  is  presented:  the   facts  that  the  industry  is  estab- 


Bk.  I  General  Protection  29 

iished  and  the  capital  and  labour  employed.  If  the  attention  is  limited 
to  these  phases  of  the  Protection  which  raises  price  in  order  to  encourage 
industry,  it  seems  that  the  subject  is  viewed  from  the  position  of  the 
producer  alone,  and  that  of  the  consumer  is  ignored.  An  indefinite 
number  of  facts  in  favour  of  the  protective  system  may  thus  be  presented 
with  ease;  an  indefinite  number  of  truths,  it  may  be  said;  but  these  facts 
will  be  but  half  the  facts,  the  truths  but  half  truths,  and  the  other  half 
of  the  facts  have  no  less  bearing  upon  conclusions  derived  than  the  first 
half  alone.  Thus,  when  the  position  is  stated  that  the  encouragement 
of  industry  is  desirable  by  means  of  the  artificial  raising  of  price,  the 
entire  position  is  not  presented;  the  necessary  consequences  of  raising 
prices  to  consumers  is  neglected.  If  this  form  of  Protection  is  beneficial, 
the  position  should  be  put  in  the  following  form.  The  encouragement  of 
industry  is  beneficial;  therefore  prices  should  be  raised  to  consumers. 

Again,  the  economic  advisability  of  raising  prices  by  means  of  an  im- 
port duty  does  not  follow  from  the  assumption  that  industry  should  be 
encouraged;  for  the  reason  that  all  prices  cannot  be  raised  by  import 
duties.  It  is,  in  consequence,  impossible  to  encourage  all  industry  by 
means  of  the  taxation  of  some  imports.  The  raising  of  the  price  of 
some  imports  by  means  of  a  tax  must  act  as  a  deterrent  influence  upon 
other  industries;  as  the  tax  affects  other  producers  and  consumers.  Food 
taxes  offer  little  protection  to  the  majority  of  farmers  of  a  food  export- 
ing country.  No  tax  on  foreign  commodities  can  protect  the  building  or 
transportation  interests,  as  such;  the  employers  of  unprotected  labour, 
or  any  of  the  thousand  and  one  occupations  which  natural  conditions 
create  in  every  country  and  which  are  not  dependent  upon  import 
duties.  It  thus  seems  impossible  to  benefit  all  industry  by  the  taxation 
of  some  imports.  This  may  be  made  clearer  in  another  way:  a 
direct  bounty  or  subsidy  is  a  most  effective  method  of  encouraging 
industry.  If  this  method  were  adopted  as  a  means  of  encouraging 
industry,  the  result  is  evident;  each  individual  in  a  country  would  be 
justified  in  demanding  his  or  her  quota  of  encouragement;  with  the 
result  that  each  would  receive  the  taxes  already  paid  less  the  cost  of 
collection  and  distribution.  There  would  in  reality  be  little  encour- 
agement for  any  industry  but  tax-gathering  in  such  a  system.  It 
thus  seems  that  only  some  industries  can  be  encouraged  by  means  of 
taxation  of  imports  which  raises  prices,  and  that  other  industries  must 
be  discouraged  owing  to  greater  scarcity  and  increased  cost. 

It  therefore  seems  that  the  original  protective  position  requires  still 


36  The  Old  Protection  Pt.  I 

another  restatement,  in  order  to  present  the  conditions  more  accurately; 
and  should  be  put  as  follows:  Certain  industries  should  be  encouraged; 
therefore,  prices  should  be  raised  to  all  consumers  and  certain  indus- 
tries should  be  discouraged.  Nor  does  this  statement  seem  in  any 
way  an  imfair  revision  of  the  position  of  this  phase  of  Protection,  for  if 
industry  is  encouraged  on  one  side  by  raising  prices  artificially,  other 
industries  must,  apparently,  be  discouraged  proportionately  on  another 
by  affecting  consumers  adversely;   whether  industries  or  individuals. 

When,  however,  the  protective  policy  of  raising  prices  for  the  encour- 
agement of  industry  is  stated  in  this  way,  every  argument  in  its  support 
might  be  advanced  in  support  of  a  policy  emplo3dng  a  part  of  the  public 
funds  for  the  purpose  of  building  sand-hills  on  the  seashore  which  the 
rising  tide  could  wash  away.  This  policy  would  encourage  infinite 
industry,  create  an  unlimited  demand  for  labour;  and  so,  upon  protec- 
tive principles,  raise  wages,  increase  prosperity,  create  a  demand  for 
agricultural  produce,  and  so  on. 

Such  a  statement  may  seem  at  first  sight  a  mere  travesty  upon  the 
protective  theory;  it  may  be  said  that  no  analogy  exists  between  the 
support  of  productive  industry  by  means  of  taxation  and  the  govern- 
mental building  of  sand-hills;  the  first  producing  consumable  wealth, 
the  other  nothing;  the  first  giving  profitable  employment  to  capital,  the 
other  paying  out  public  funds  in  unproductive  activity. 

Upon  closer  examination,  the  analogy  between  the  two  policies  is  not 
as  forced  as  might  be  supposed.  The  supposition  may  be  adopted  by 
way  of  illustration  that  a  people,  by  means  of  the  unusual  arguments,  is 
induced  to  adopt  this  form  of  high-priced  protective  taxation  in  order  to 
encourage  industry.  If  it  is  supposed  that  it  costs  the  people  £1,000,000 
annually  to  encourage  industry  in  this  way,  the  question  is  whether  these 
£1,000,000,  as  far  as  the  people  at  large  is  concerned,  might  not  equally 
well  have  been  paid  from  the  public  treasury  in  employing  labour  to 
build  sand-hills.  By  means  of  the  protective  duty  which  raises  price, 
these  £1,000,000,  taxed  out  of  the  pockets  of  the  people,  are  usually 
distributed  through  three  channels:  artificial  profits  to  capital,  wages 
to  labour,  and  custom  house  expenses.  The  profits  to  capital  may  be 
of  two  kinds:  either  abnormally  swollen  through  monopolistic  organiza- 
tion, or  reduced  to  the  normal  level  through  competition  within  the 
protected  area.  The  wages,  of  course,  consist  simply  in  paying  £10  in 
wages  in  order  to  produce  £5  in  result;  that  is,  the  labour  employed  in 
industry,  dependent  upon  taxation  for  its  support,  is  unproductive  labour 


Bk.  I  General  Protection  31 

to  the  extent  of  the  difference  in  value  between  the  taxed  price  and  the 
normal  price  of  the  commodity  produced.  That  portion,  therefore,  of 
the  £1,000,000  of  extra  cost  paid  to  labour  is  paid  to  unproductive 
labour;  to  labour  employed  for  a  longer  time  than  necessary  to  produce 
a  given  result.  The  remainder  of  the  £1,000,000  goes  to  custom  house 
officials,  inspectors,  and  functionaries  of  various  kinds;  that  is,  it  again 
goes  to  unproductive  labour. 

If,  at  any  given  time,  there  had  been  no  duty  and  consequently 
no  artificially  supported  industry,  the  capital  in  the  country  would  be 
the  same  as  with  the  duty;  the  same  amount  of  capital  would  seek  em- 
ployment and  the  same  amount  of  labour  would  apparently  be  employed; 
the  retiurns  to  capital  would  be  the  normal  returns  uninfluenced  by 
taxation  or  monopolistic  organizations.  The  duty  offers  neither  a 
greater  amount  of  employment  to  capital  nor  to  labour,  merely  diverting 
them  from  normal  to  abnormal  channels.  The  duty  can,  therefore,  it 
seems,  achieve  but  the  following  results:  (i)  It  may  give  a  monopolized 
profit  to  capital;  if  not,  the  normal  profit  could  be  obtained  without  the 
duty  and  no  result  occurs  as  far  as  capital  is  concerned.  (2)  It  pays  a 
portion  of  the  £1,000,000  to  labour  employed  in  producing  commodities 
which  cost  more  than  they  are  worth;  this  labour  is  unproductively 
employed  to  the  extent  of  the  difference  between  the  protected  and 
unprotected  values  of  the  commodities,  and  to  this  extent,  therefore, 
as  far  as  producing  anything  is  concerned,  the  labour  might  just  as  well 
have  been  employed  on  the  sand-hills.  (3)  The  remainder  of  the 
£1,000,000  goes  to  officials  occupied  in  collecting  taxes  which  raise  the 
price  of  goods,  officials  quite  as  improductively  employed  as  the  unneces- 
sary labour.  Thus,  so  far  as  producing  any  real  wealth  is  concerned, 
the  encouragement  of  industry  by  means  of  prices  forced  up  through 
taxation  is  fimdamentally  not  far  removed  from  its  encouragement  by 
means  of  employing  labour  in  the  erection  of  sand-hills  on  the  seashore. 
The  two  propositions  seem  practically  identical;  for,  it  might  be  asked, 
what  difference  could  it  make  to  a  people  as  a  whole,  whether  a  certain 
amount  of  the  public  money  is  used  to  pay  artificially  swollen  profits, 
unnecessary  labour,  and  salaries  to  unproductive  officials;  or  to  en- 
courage industry  among  the  sand-hills?  In  fact,  support  may  be  found 
for  the  opinion  that  the  £1,000,000  might  have  been  better  employed 
in  the  sand  than  in  the  diversion  of  the  resources  of  a  people  into  chan- 
nels created  by  taxed  prices.  If  the  public  funds  had  been  expended  in 
the  sand-hill  industry,  the  money  would  have  gone  to  the  greater  num- 


32  The  Old  Protection  Pt.  I 

ber  in  the  form  of  wages,  and  not  to  the  smaller  number  in  the  form  of 
artificial  profits  and  salaries.  Again,  the  encouragement  of  industry 
of  this  kind  may  be  withdrawn  at  any  time  without  endangering  pro- 
tected capital  in  any  way.  Lastly,  because  in  this  way  the  people  may 
know  exactly  how  much  it  costs  to  "encourage  industry"  and  may 
compare  the  result  obtained  with  the  expense  involved. 

There  is  thus,  apparently,  another  form  in  which  the  protective 
position  which  raises  price  might  be  put  without  doing  violence  to  its 
fundamental  principles.  This  form  would  be  something  like  the  follow- 
ing: some  industry  should  be  encouraged;  therefore,  a  portion  of  the 
people 's  money  should  be  handed  over  to  certain  individuals  to  do  with 
as  they  please.  This  formulation  of  the  phase  of  Protection  under 
discussion  is  in  complete  harmony  with  the  views  of  Mill  and  Adam 
Smith. 

"A  commodity  is  never  permanently  imported,"  says  Mill,^  "unless 
it  can  be  obtained  from  abroad  at  a  smaller  cost  of  labour  and  capital 
on  the  whole,  than  is  necessary  for  producing  it.  If,  therefore,  by  a 
duty  on  the  importation,  it  is  rendered  cheaper  to  produce  the  article 
than  to  import  it,  an  extra  quantity  of  labour  and  capital  is  expended, 
without  any  extra  result.  The  labour  is  useless,  and  the  capital  is  spent 
in  paying  people  for  laboriously  doing  nothing."  Protective  taxes  are, 
of  course,  effective  but  as  they  affect  the  great  staples  of  commerce 
represented  by  the  necessaries  of  vital  and  industrial  existence. 
"Taxes  upon  the  necessaries  of  life,"  says  Adam  Smith,^  "have  nearly 
the  same  effect  upon  the  circumstances  of  the  people  as  a  poor  soil  or  a 
bad  climate.  Provisions  are  thereby  rendered  dearer  in  the  same  manner 
as  if  it  required  extraordinary  labour  and  expense  to  raise  them." 
.  .  .  "Such  taxes,  when  they  have  grown  up  to  acertain  height, 
are  a  curse  equal  to  the  barrenness  of  the  earth  and  the  inclemency  of 
the  heavens." 

Article  5  —  Protection  Which  Lowers  Price. 

The  protective  duty,  it  may  be  said,  instead  of  raising  prices  in  reality 
lowers  them.  To  the  advocate  of  the  high-priced  Protection,  cheapness 
is  little  better  than  contagion.  The  cheap  coat=cheap  man  position  of 
President  McKinley,  is  well  known.  Nevertheless,  a  certain  frailty  in 
human  nature  questions  at  times  the  economic  wisdom  of  paying  more 

'  Principles  nf  Political  Economy,  Bk.  V.,  ch.  iv.,  §  5.  p.  511. 
«  The  Weallh  of  Nations,  Bk.  IV..  ch.  ii.,  p.  39. 


Bk.  I  General  Protection  33 

for  goods  than  the  goods  are  worth;  to  meet  this  weakness  another  school 
of  Protection  appears,  which  repudiates  that  of  the  higher  price.  This 
phase  of  Protection  presents  the  import  duty  in  a  new  role:  that  of  the 
poor  consumer's  friend.  Protection  is  urged  on  one  side  as  raising  prices, 
and  thus  encouraging  industry,  employing  labour,  raising  wages,  and 
so  forth.  Protection,  it  is  said  on  another  side,  lowers  prices  and  thus 
encourages  industry,  employs  labour,  raises  wages,  and  so  forth.  A 
bewildering  array  of  facts,  figures,  and  diagrams  may  be  prepared  in 
support  of  either  contention. 

Reduced  price  is  the  cornerstone  of  this  form  of  Protection,  as  is  in- 
creased price  that  of  the  policy  considered.  In  order  to  show  that 
Protection  lowers  prices,  the  following  method  may  be  adopted.  A 
commodity  is  selected,  a  date  is  given,  the  price  of  the  commodity  is 
quoted  on  that  date;  an  import  duty  is  imposed,  the  price  of  the  com- 
modity is  given  at  a  later  date,  the  last  price  is  lower  than  the  first. 
These  are  the  facts:  from  the  facts  the  theory  is  evolved,  that  the  import 
duty  lowers  prices. 

At  first  sight  nothing  may  seem  more  clear  than  that  which  the  facts 
are  desired  to  prove.  As  sometimes  happens,  however,  with  the  pres- 
entation of  facts  of  this  nature,  all  the  facts  are  not  cited.  In  order  to 
make  a  complete  case  in  support  of  this  position,  the  price  at  which  the 
article  could  be  imported  at  the  later  date  should  be  given;  if  the  article 
could  be  imported  at  the  later  date  for  less  than  the  protected 
article,  it  seems  evident  that  the  duty  had  not  only  not  lowered  the  price, 
but  was,  in  fact,  keeping  it  above  the  normal  level.  These  are  the  real 
facts,  and  it  is  safe  to  assume  where  the  import  duty  is  retained,  that  the 
taxed  price  is  higher  than  the  import  price;  were  this  not  so,  the  duty 
would  be  useless.  This  untaxed  import  price,  however,  never  appears  in 
the  home  market,  for  the  reason  that  the  foreign  goods  are  shut  out  or 
raised  in  price  by  the  duty;  with  the  result  that  nothing  is  easier  than 
to  trace  the  reduced  price  to  the  duty,  to  domestic  competition,  or  to  the 
improved  methods  of  production  that  it  may  have  brought  into  exist- 
ence. 

A  closer  comparison  of  prices  and  methods,  however,  might  show  that 
natural  causes,  independent  of  the  duty,  have  been  the  real  cause  of  the 
reduction,  while  the  duty  was  simply  maintaining  an  artificially  in- 
creased price,  of  which  fact  the  people  are  ignorant,  as  the  second  import 
price  never  appears.  The  fact  that  a  price  falls  after  the  imposition  of 
the  duty  no  more  shows  that  the  fall  is  caused  by  the  duty  than  the 


34  The  Old  Protection  Pt.  I 

fact  that  a  boat  had  changed  its  place,  shows  that  the  change  is  due 
to  a  breeze  sprung  up  in  the  meantime.  The  boat  may  have  changed 
its  position  by  the  use  of  steam  or  electricity;  currents  or  tides  may  have 
been  the  motive  power,  the  breeze  possibly  unfavourable.  There  exists 
one  ideal  industry  of  this  nature:  the  steel  and  iron  industry  of  the 
United  States.  This  industry  is  invariably  cited  in  all  Protection 
literature  as  the  unchallenged  example  of  the  wisdom  of  Protection. 
What  are  the  facts?  "One  feature  of  the  Tariff  Act  of  1870  may  be 
briefly  mentioned  in  passing,"  says  Mr.  Low.^  "It  placed  a  duty  of 
$28  (£5,123.)  per  ton  on  steel  rails,  with  the  fixed  purpose  of  developing 
the  home  industry.  In  the  year  before  the  passage  of  the  Bill  placing 
this  high  duty  on  steel  rails,  the  number  of  tons  produced  in  the  United 
States  was  8,616.  By  1875,  the  manufacture  had  developed  to  259,699 
tons;  by  1881,  it  was  1,210,285  tons,  and  in  1883  the  duty  was  reduced 
to  $17  per  ton,  and  in  1890  to  $13  per  ton.  From  $106  a  ton  in  1870  the 
price,  through  domestic  competition,  fell  to  $28  a  ton  in  1902."  These 
facts,  it  seems,  "speak  for  themselves."  In  spite  of  vast  increase  in 
demand  during  this  period,  not  only  did  the  price  of  rails  constantly  fall 
after  the  imposition  of  the  duty,  but  the  duty  itself  is  continually  lowered. 
The  price  of  rails  in  1870  was  $106  a  ton;  after  the  duty  is  imposed,  the 
price  falls  to  $28  a  ton  in  1902-3;  the  duty  following  suit  during  the  same 
period,  from  $28  in  1870  falling  to  the  Dingley  duty  of  $8.  With  a  little 
taste  for  statistical  compilation,  these  figures  might  be  carried  farther 
in  order  to  show  the  benefits  of  this  form  of  Protection.  The  average 
consumption  of  rails  during  the  period  1870-1903  might  be  estimated 
with  the  average  reduction  in  price  during  that  period;  a  fabulous  total 
could  thus  be  reached  and  presented  as  the  saving  gained  by  the  Ameri- 
can people  owing  to  the  wisdom  of  their  legislative  assemblies  in  taxing 
steel  rails. 

A  question,  however,  arises:  might  not  rails  have  been  imported  during 
all  this  time  for  a  price  less  than  that  quoted? 

The  fact  that  the  duty  was  never  abandoned  suggests  that  such  was 
the  case.  This  being  so,  it  seems  that  the  millions  presented  as  savings 
would  be,  to  say  the  least,  misleading;  and  it  becomes  essential  to  con- 
sider another  series  of  facts  with  equal  bearing  upon  the  case. 

"Now,2  to  show  how  the  Dingley  duty  of  $8  per  ton  on  steel  rails  taxes 
American  railroads,  and  hence  reaches  deep  into  the  pockets  of  shippers 


>  Protection  in  the  United  Slates.     A.  Maurice  Low,  p.  31. 

'  John  R.  Dunlap.     The  Evening  Post,  N.  Y.,  October  26,  1904. 


Bk.  I  General  Protection  35 

and  travellers  on  American  railroads,  I  need  only  cite  the  fact  that, 
during  the  year  1903,  our  American  railroads  purchased  from  the  steel 
pool  exactly  3,046,836  tons  of  new  steel  rails  (see  statistical  abstract, 
Department  of  Commerce  and  Labor).  The  prices  toj  foreign  railroads 
being,  say  $20  per  ton  —  as  we  now  know  —  and  the  pool  price  to 
American  railroads  being  $28  per  ton,  that  means  that  the  American 
people,  during  the  single  year  last  past,  contributed  a  clean  net  profit  of 
$24,374,688  to  the  rail  pool.  .  .  .  And  during  the  past  six  years  — 
since  the  Dingley  bill  was  enacted  —  these  same  American  railroads 
have  been  forced  to  contribute  to  the  few  members  of  the  rail  pool 
exactly  $102,621,256  — or  $8  per  ton  on  12,827,657  tons  of  rails  bought 
and  used." 

Rails  ofifer  no  exceptional  example  of  the  advantages  of  this  form  of 
Protection.  Another  passage  from  the  letter  quoted  serves  as  illustra- 
tion. "In  the  spring  of  1903,  I  had  occasion  to  get  exact  market 
quotations  for  various  iron  and  steel  products  in  'free  trade'  England 
and  'protection'  America.  The  quotations  were  supplied  by  one  of 
the  oldest  and  most  reputable  New  York  firms  engaged  in  the  import 
trade  in  iron  and  steel,  and  they  were  as  follows,  the  quotations  in  each 
case  being  for  a  long  ton  of  2,240  lbs.  f.o.b.  at  Middlesboro  and  Swansea, 
England,  and  f.o.b.  Pittsburgh,  Pa.,  the  prices  being  those  current 
during  the  first  half  of  May,  1903: 

England                United  Dingley 

States  Duty 

$48.10  $13-44 

30.00  6.72 

19.3s  400 

19.7s  4.00 

19 .  00  4 .  00 

38.08  13.44 

72.80  29.12 

"Since  May,  1903,  there  has  been  some  decline  in  American  prices  — 
but  also  a  corresponding  decline  in  English  prices.  In  other  words,  the 
differences  between  American  and  English  prices  are  still  current,  as  they 
have  been  since  the  day  the  Dingley  Bill  was  enacted;  and  this  state- 
ment can  be  verified  by  an  examination  of  the  past  and  current  quotations 
given  in  the  Iron  Age  of  New  York  and  the  Iron  and  Coal  Trades 
Review  of  London. " 

A  brief  analysis  of  these  prices  and  a  reahzation  of  the  millions  they 
represent,  taxed  out  of  the  pockets  of  the  American  people,  render  of 


Merchant  bar  iron  . 

.     $30.00 

Bessemer  billets 

20.00 

Bessemer  pig  iron    . 

.       14.36 

No.  3  foundry  iron  . 

11.40 

Gray  forge  iron 

II.  2S 

Tank  plates 

•          3091 

Black  plates 

.       S0-40 

2,6  The  Old  Protection  Pt.  I 

doubtful  advantage  the  economy  involved  in  the  Protection  which  lowers 
prices.  The  foregoing  considerations,  however,  but  represent  a  par- 
ticular period.  The  effect  of  such  taxation  extending  over  a  number  of 
years  has  been  reviewed  by  Mr.  D.  A.  Wells, ^  who  filled  the  position  of 
Special  Commissioner  of  Revenue  in  the  United  States  for  some  time. 
He  says: 

"The  average  price  for  steel  rails  in  the  United  States  from  1878  to 
1887  was  $44  per  ton.  In  Great  Britain,  during  the  same  period,  the 
average  was  $30  per  ton.  At  these  rates,  the  adverse  difference  in  the 
cost  of  consumption  of  20,000,000  tons  of  steel  in  the  United  States 
would  have  been  $280,000,000.  But  as  a  difference,  as  respects  the 
cost  of  the  iron  used  in  the  making  of  steel  in  the  two  countries  of  $7  per 
ton,  has  already  been  allowed,  the  cost  of  the  consumption  of  steel  in 
the  United  States  may  be  properly  charged  with  only  one  half  this 
disparity,  or  $140,000,000. 

"Taking,  therefore,  the  lowest  grades  of  iron  and  steel  as  a  standard 
in  this  computation  of  the  disparity  of  cost  or  price,  from  1878  to  1887, 
the  aggregate  excess  of  cost  of  iron  and  steel  in  ten  years,  to  the  con- 
sumers of  the  United  States,  above  that  paid  in  Great  Britain,  has  been 
$560,000,000,  or  at  an  average  of  $56,000,000  per  annum;  and  on  a 
separate  computation,  made  in  the  same  way,  for  the  year  1887,  the 
disparity  in  price  for  the  United  States  rises  for  that  single  year  to 
$80,000,000.     . 

"In  1880  there  were  1,005  iron  and  steel  works,  rolling  mills,  and  blast- 
furnaces in  the  United  States,  whose  aggregate  capital,  according  to  M. 
Swank,  was  $231,000,000.  According  to  Professor  Pumpelly,  the  capital 
in  the  iron  mines  of  the  country  for  that  same  year  was  $62,000,000;  and 
from  the  joint  reports  of  these  two  census  experts  it  would  appear  that 
the  aggregate  capital  invested  in  all  the  coal-mines  of  the  country,  at  the 
same  date,  was  $248,000,000,  of  which  nearly  $200,000,000  stood  for  the 
value  of  the  mineral  lands  or  royalties.  The  proportion  of  coal  and  the 
cost  of  coking,  chargeable  to  the  iron  industry,  may  possibly  cover  the 
odd  $48,000,000.  The  entire  capital  invested  in  the  iron  and  steel 
industry  in  the  United  States  in  1880  was,  therefore,  about  $341,000,000; 
and  the  data  above  submitted  warrant  the  conclusion  that  the  price 
paid  by  the  consumers  of  iron  and  steel  in  the  United  States,  in  order  to 
sustain  these  industries  for  ten  years,  and  to  enable  the  owners  thereof 
to  enjoy  its  profits  —  paying  wages  to  their  employes  somewhat  less  on  an 

'  Recent  Economic  Changes,  pp.  472,  474. 


Bk.  I  General  Protection  37 

average  than  were  paid  at  the  same  time  to  other  and  outside  labour  — 
was  about  65  per  cent,  more  than  the  entire  capital  invested  in  it.  And, 
as  it  has  been  already  shown  that  it  would  be  impossible  for  any  other 
country  to  supply  the  annual  requirements  of  the  United  States  of  iron 
and  steel  for  consumption,  it  further  follows  that  the  payment  of  $50,- 
000,000  to  $80,000,000  per  annum  of  this  country  to  sustain  a  branch 
of  industry  which  cannot  be  displaced  destroyed  or  by  any  possible 
foreign  competition,  is  clearly  necessary. " 

The  fundamental  maxim  of  orthodox  Protection  is  that  protective 
taxation  encourages  industry.  Taxation  of  this  kind  can  affect  industry 
through  price  alone.  In  the  foregoing  discussion,  reason  appeared  for 
believing  that  taxation  which  forces  up  price  can  never  "create"  any- 
thing but  waste.  In  the  study  of  Protection  which  lowers  price,  there 
seemed  grounds  for  the  opinion  that  such  taxation  can  never  really  lower 
price;  if  it  did,  it  would  cease  to  protect.  An  examination  of  one  of  the 
most  noteworthy  protected  industries  of  this  kind  suggests  that  such 
Protection  forced  millions  out  of  the  natural  distributive  channels 
of  the  wealth  of  the  people  taxed  in  order  to  encourage  it. 

An  examination  of  Protective  taxation  in  its  relation  to  industry  seems 
to  lead  to  the  following  positions: 

1.  The  bulk  of  the  industry  in  any  country  is  directly  dependent 

upon  the  capital  seeking  investment. 

2.  No  accumulation  of  protective  taxes  can  increase  the  amount, 

of  such  capital. 

3.  Protective  taxation  can  only  affect  industry  through  increase 

of  price,  which  involves  proportionate  loss  and  restriction  of 
all  industry  brought  under  the  influence  of  such  taxation 
through  raw  materials,  transportation  rates,  and  so  on. 


CHAPTER  in 


PROTECTION    AND    LABOUR, 


Section  I — The  Creation  of  a  demand  for  Labour  by  Protective 
Taxation.  Section  II — The  Raising  of  Wages  by  Protective 
Taxation.  Section  III  —  Pauper  Labour  and  Protection. 
Section  IV — Protected  Labour  in  the  United  States. 


Section  I — The  Creation  of  a  Demand  for  Labour  by  Protec- 
tive Taxation 

THE  positions  that  a  tax  upon  a  certain  commodity  can  create, 
or  increase  a  demand  for  labour,  raise  wages,  keep  them  at  a 
higher  level,  or  add  to  their  purchasing  power,  lie  at  the 
foundations  of  the  protective  structure;  and  are  either 
tacitly  assumed  by  protectionist  apologists  or  supported  by  the  usual 
array  of  fact  and  figure. 

The  method  of  demonstration  is  simple:  a  duty  is  imposed;  the 
duty  diverts  a  certain  amount  of  capital  toward  a  given  industry;  the 
industry  naturally  employs  labour;  without  the  duty  the  industry  could 
not  exist;  the  conclusion  is  that  the  labour  would  not  be  employed 
without  the  tax. 

It  seems  evident  that  it  is  not  the  tax  which  employs  the  labour,  but 
the  capital;  it  also  seems  e\ddent  that  the  tax  does  not  create  the  capital; 
the  capital  must  have  been  in  existence,  seeking  investment,  before  the 
fixing  of  the  duty,  or  there  woujd  have  been  no  purpose  in  its  imposition; 
yet,  without  assuming  that  an  import  duty  can  bring  capital  into  exist- 
ence, it  is  not  easy  to  discover  how  an  import  duty  can  bring  a  demand 
for  labour  into  existence.  If  an  import  duty  could  create  capital,  it  is 
evident  that  a  certain  amount  of  capital,  which  did  not  exist  before,  must 
miraculously  appear  from  surrounding  space  within  a  given  area  im- 
mediately after  the  imposition  of  a  duty  upon  a  certain  commodity. 
Few  students  of  the  subject  will  care  to  ascribe  these  magic  properties 
to  the  import  tax;  yet,  as  labour  cannot  be  employed  without  capital,  it 

38 


Bk.  I  Protection  and  Labour  39 

seems  no  less  miraculous  to  suppose  that  a  duty  can  create  a  demand 
for  labour  than  to  assume  that  it  creates  capital.  The  miracle  would 
be  no  less  in  one  instance  than  in  the  other;  it  would,  in  fact,  be 
the  same  miracle;  and  yet  this  mu-acle  is  assumed,  and  from  it  arises 
the  entire  fabric  of  Protection  in  relation  to  labour. 

The  facts,  figures,  and  diagrams  which  may  be  compiled  to  demonstrate 
this  position  of  Protection  with  reference  to  labour  are  without  limit. 
They  may  be  prepared  along  the  following  lines.  The  entire  protected 
capital  of  a  country  and  the  total  amount  of  protected  wage  dependent 
upon  it,  may  be  estimated;  two  great  totals  of  capital  and  wage  depen- 
dent upon  the  import  duty  are  thus  reached.  The  prices  of  certain 
commodities  may  be  given  before  and  after  the  imposition  of  the  duty, 
if  the  later  prices  are  lower  than  the  earlier,  it  is  possible  to  arrange 
another  series  of  figures  representing  increased  efficiency  of  wages  owing 
to  the  duty;  showing  that  wages  had  either  been  raised  or  their  purchas- 
ing power  increased.  Thus  an  enormous  aggregate  of  millions  may  be 
presented,  representing  protected  capital,  protected  wages,  and  the 
increased  purchasing  power  of  the  latter;  all  of  which  are  traced  to  the 
beneficent  influence  of  the  duty.  These  figures  would  present  the  facts 
upon  which  is  based  the  theory  that  Protection  creates  a  demand  for 
labour  and  increases  wages. 

Unless,  as  has  been  seen,  it  is  admitted  that  an  import  duty  can  create 
capital  where  none  existed,  the  millions  representing  protected  capital 
fail  in  demonstrating  the  advantages  of  Protection  as  an  employer  of 
labour;  for  the  reason  that  the  capital  must  have  existed  in  the  country 
before  the  duties  were  fixed,  and  these  millions  must,  therefore,  have 
employed  the  same  amoimt  of  labour  whether  the  taxes  were  imposed  or 
not.  In  the  same  way,  the  millions  representing  protected  wage  seem 
no  less  unconvincing;  for  the  reason  that  the  capital  already  existing 
must  have  paid  them,  duty  or  no  duty.  It  has  been  seen  how  Protection 
reduces  prices  in  one  of  the  most  highly  protected  industries  in  the  world, 
which  has  constantly  lowered  prices,  and  if  such  reductions  as  these  are 
studied,  they  may  lead  to  more  or  less  skeptical  conclusions  with  refer- 
ence to  the  advantages  of  taxing  the  poor  man's  needs  in  order  to  make 
them  cheaper.  All  these  millions,  therefore,  representing  protected 
capital  and  protected  wages  seem  valueless  in  demonstrating  the  advan- 
tages of  Protection  for  the  wage- worker:  First,  because  capital  is 
brought  into  being  through  the  natural  action  of  industry  and  trade, 
and  not  through  the  imposition  of  import  duties.    Second,  because 


40  The  Old  Protection  Pt.  I 

existing  capital  must  employ  labour,  duty  or  no  duty.  Third,  because 
Protection  never  really  lowers  price;  if  it  did,  the  tax  would  not  protect. 
Many  considerations  are  advd.nced  with  reference  to  the  supposed 
advantages  gained  by  labour  through  the  protective  duty,  the  majority 
depending,  however,  directly  or  indirectly,  upon  the  assumption  that 
protective  taxation  creates  a  demand  for  labour,  which  implies  the  crea- 
tion of  capital.  As  it  is,  however,  impossible  to  discuss  the  subject 
of  Protection  in  relation  to  labour,  without  constantly  meeting  this 
''created"  demand,  it  may  be  well  to  discuss  the  conclusions  suggested, 
supposing  this  miraculous  demand  possible. 

Section  II  —  The  Raising  of  Wages  by  Protective  Taxation 

There  are  two  ways  of  raising  wages:  one  by  lowering  the  price  of 
commodities,  another  by  increasing  the  demand  for  labour.  The  first 
method  has  been  discussed  as  applied  to  Protection  which  lowers  prices- 
The  supposed  increase  in  the  demand  for  labour  created  by  protective 
taxes  remains. 

If  it  is  admitted  that  a  tax  on  a  commodity  can  increase,  or  create,  a 
demand  for  labour,  it  by  no  means  follows  that  such  a  tax  can  raise 
wages.  There  is  an  established  economic  principle  that  value  depends 
upon  supply  and  demand.  In  order  to  show  that  Protection  increases 
the  value  of  labour,  or  raises  wages,  it  seems  essential  not  only  to  show  the 
increased  demand,  but,  in  addition,  that  this  demand  exceeds  the  avail- 
able supply.  Until  the  total  demand  reaches  and  passes  the  total  supply, 
wages  will  apparently  remain  at  much  the  same  level,  unaffected  by  any 
increased  demand.  The  fact  that  in  all  protectionist  countries  a  por- 
tion of  the  population  is  in  a  state  of  unemployment,  seems  to  show  that 
Protection  does  not  absorb  the  total  available  supply  of  labour  and  is 
thus  probably  without  influence  in  increasing  wages.  As  long  as  a 
mass  of  unemployed  labour  exists  in  any  protectionist  country  there  is 
ground  for  the  opinion  that  the  taxation  of  goods  will  never  effectively 
raise  the  average  level  of  wages;  cannot,  in  fact,  raise  such  an  average 
until  all  the  unemployed  have  found  occupation. 

Other  considerations  lead  to  the  same  conclusions,  even  although  it  is 
admitted  that  a  tax  is  capable  of  creating  a  demand  for  labour  —  that 
is,  capital.  If  the  labour  in  any  country  is  divided  into  two  classes,  pro- 
tected and  unprotected,  the  first  class  can  apparently  form  but  a  small 
fraction  of  the  total,  for  the  following  reasons.  Unprotected  labour  is 
that  portion  which  meets  the  entire  home  demand  and  at  the  same  time 


Bk.  I  Protection  and  Labour  41 

produces  the  whole  of  industrial  exports;  this  labour  represents  all  nor- 
mal home  consumption,  all  exporting  industry,  together  with  all  the 
labour  employed  in  transportation,  building  trades,  and  other  daily 
occupations,  independent  of  import  duties.  The  protected  labour,  on 
the  other  hand,  represents  only  that  industry  unable  to  meet  the  home 
demand  without  artificial  aid.  The  bulk  of  unprotected  labour,  there- 
fore, must  apparently  be  greatly  in  excess  of  protected  labour,  and  it 
seems  that  the  greater  number  will  dominate  the  labour  market;  that 
is,  decide  the  rate  of  wages.  In  other  words,  that  protected  wage  will 
simply  depend  upon  the  price  of  unprotected  labour. 

The  United  States  come  nearest  the  realization  of  the  protectionist 
dream.  In  all  literature  dealing  with  the  subject,  the  United  States 
are  cited  as  the  shining  example  of  the  advantages  of  Protection.  It  is, 
therefore,  in  the  United  States  that  the  protection  of  labour  is  carried 
to  the  fullest  extent,  and  consequently  there  the  largest  proportion  of 
protected  wage- workers  may  be  found.  In  an  analysis^  of  the  census 
returns  for  1900,  it  has  been  shown  that  the  proportion  of  protected  to 
unprotected  labour  in  the  United  States  is  approximately  as  1:46. 
In  other  words,  in  that  heavily  protected  country,  there  are  forty-six 
unprotected  wage-workers  for  every  protected  wage- worker.  In  order, 
therefore,  to  accept  the  protective  theory  of  wages,  it  is  necessary  to 
suppose:  first,  that  an  import  duty  can  create  a  demand  for  labour, 
which  implies  that  it  can  create  capital;  and,  in  addition,  that  one  man 
in  forty-seven  can  affect  the  wages  received  by  forty-six,  while  at  the 
same  time  a  mass  of  unemployed  labour  is  found  in  every  large  city  in 
the  country.  To  suppose  that  protective  taxes  can  raise  the  price  of 
wages  seems  analogous  to  the  assumption  that  damming  up  a  stream 
raises  the  level  of  the  ocean  into  which  it  flows. 

Section  III  —  Pauper  Labour  and  Protection 

The  effect  of  protective  taxation  is  to  raise  prices  to  the  home  con- 
siuner;  if  it  does  not,  it  ceases  to  protect.  This  benefits  the  sellers  of 
commodities;  the  wage- worker,  however,  is  not  a  seller  of  commodities 
but  a  seller  of  labour,  and  it  seems  not  unnatural  to  ask  why  the  in- 
creased price  of  commodities  should  benefit  the  seller  of  labour?  The 
price  of  labour  is  measured  in  money,  as  is  the  price  of  commodities;  as 
the  value  of  the  latter  goes  up,  the  value  of  wages  must  apparently  go 
down;  it  must  require  a  greater  amount  of  labour  to  obtain  the  same 

'  Mr.  Edward  Atkinson.     Facts  and  Figures  the  Basis  of  Economic  Science,  p.  42. 


42  The  Old  Protection  Pt.  I 

commodities.  Yet  this  increased  price  is  urged  as  a  benefit  to  labour; 
the  worker  is  practically  told  that  the  less  the  value  of  his  wages,  that  is, 
the  higher  the  price  of  commodities,  or  the  more  he  has  to  work,  the 
better  off  he  is. 

This  position  gives  rise  to  the  "pauper  labour"  argument  which  has 
long  gone  hand  in  hand  with  the  "infant  industry"  in  the  fields  of  classic 
Protection.  The  position  may  be  stated  as  follows:  The  foreigner 
works  for  so  much;  we  naturally  desire  a  higher  standard  of  wages;  we, 
therefore,  have  but  to  exclude  the  foreigner  from  our  markets  by  means 
of  the  omnipotent  import  duty  and  all  will  be  well.  The  price  of  goods 
will  go  up,  wages  will  be  paid  at  a  higher  rate,  a  demand  for  labour  will 
be  created,  and  all  the  blessings  of  the  protectionist  paradise  enjoyed  by 
the  people. 

The  "pauper  labour"  position  assumes  that  cost  of  production  de- 
pends entirely  upon  the  rate  of  wages,  and  that  the  rate  of  wages  depends 
upon  the  price  of  goods.  If  the  first  were  true,  it  would  naturally  follow 
that  India  and  China,  with  their  enormous  populations  and  small  wage, 
would  control  the  industrial  markets  of  the  world.  If  cost  of  production 
depended  entirely  on  wages,  no  low- wage  European  country  would  need 
Protection  against  relatively  high- wage  England  and  America.  If  wages 
were  the  dominant  factor  in  production,  how,  it  might  be  asked,  could 
high-wage  England  have  held  the  commercial  supremacy  of  the  world 
for  more  than  half  a  century  without  a  single  protective  tax  on  her 
schedules?  The  facts,  when  examined  in  the  markets  of  the  world,  seem 
to  show  that  cost  of  production  does  not  depend  upon  wages,  but  upon 
the  natural  resources  of  a  country,  upon  the  skill  of  a  population,  upon 
its  ability  to  invent  and  make  use  of  machinery,  and,  very  largely,  upon 
its  intelligence  applied  to  systematic  production  and  the  organization 
of  industry. 

The  assumption  that  the  rate  of  wages  depends  upon  high  price  sug- 
gests the  following  considerations:  The  taxing  of  the  food  of  the 
English  people  under  the  Corn  Laws  was  a  form  of  Protection  maintained 
in  order  to  put  up  prices  in  the  interests  of  the  land-owning  classes  of 
England.  The  manufacturing  class  was  unprotected  by  this  form  of 
taxation;  on  the  contrary,  it  was  found  that  it  must  discourage  manu- 
factures, England  being  a  food  importing  country.  As  nations  can  only 
exchange  their  products  with  each  other,  and  as  imports  must  always 
be  the  equivalent  of  exports,  it  was  found  that  England,  by  taxing,  or 
restricting  her  imports  (foodstuffs),  was  in  reality  taxing,  or  restricting, 


Bk.  I  Protection  and  Labour  43 

her  own  exports  (manufactures).  In  other  words,  England,  in  forcing 
up  the  price  of  her  own  cereals,  as  against  foreign  pauper  labour,  was  ren- 
dering her  own  manufactures  proportionately  more  difficult  and  closing 
the  foreign  market  to  them;  in  other  words,  protecting  the  manufactures 
of  foreign  countries.  This  attitude  of  manufacturing  capital  in  England 
led  to  the  final  overthrow  of  the  Corn  Laws.  Thus,  as  long  as  land- 
owning legislation  was  dominant  in  England,  Protection  demanded  high- 
priced  foodstuffs  in  order  to  protect  English  labour  against  the  foreign 
pauper.  This  kind  of  Protection,  however,  it  was  found,  protected 
foreign  manufactures,  and,  when  the  influence  of  manufacturing  capital 
began  to  be  felt  in  Parliament,  Protection  demanded  low-priced  food- 
stuffs, in  order  to  protect  the  people  from  the  foreign  pauper.  The 
repeal  of  the  Corn  Laws  in  England  was  as  much  a  protective  measure 
as  the  tax  on  grain.  One  measure  was  dictated  by  the  land-owning 
class,  the  other  by  the  manufacturing  class;  and  protection  against 
the  pauper  foreigner  was  made  the  excuse  both  for  the  high  price 
and  the  low  price  of  the  same  commodities.  The  English  Corn 
Laws  protected  foreign  manufactures  by  checking  English  imports.  In 
the  United  States,  a  food-producing  nation,  conditions  exactly  the 
reverse  of  those  of  England  might  be  expected  to  produce  the 
same  results:  protect  foreign  manufactures  of  highly  finished  products. 
How  this  is  done  may  be  shown  in  the  following  extract  from  a  com- 
prehensive review  of  American  trade  conditions  in  1830: ^ 

"The  injurious  effect  which  the  duty  has  on  the  numerous  mechanics 
employed  in  the  various  manufactures  of  iron  has  been  so  ably  and 
forcibly  exposed  in  their  representations  to  your  honourable  body,  that 
we  have  nothing  to  add  on  that  subject;  but,  as  we  beg  leave  respectfully 
to  refer  to  their  memorials,  we  must  do  it  with  one  exception.  So  far 
as  we  are  informed,  we  are  induced  to  believe  that  they  have  overrated 
the  quantity  of  iron  contained  in  the  hardware  imported  into  this  coun- 
try —  an  error,  which,  if  it  is  one,  does  not  weaken  their  arguments 
respecting  the  main  question  at  issue.  The  leading  facts  are,  that 
amongst  the  foreign  manufactures  imported  into  the  United  States, 
hardware,  cutlery  and  all  others  of  which  iron  is  the  material,  are  ex- 
ceeded only  by  those  of  cotton,  woollen,  and  silk  stuffs;  and  that  the 
prime  cost  of  the  quantity  annually  consumed  amounts  to  $3,500,000, 
whilst  that  of  the  bar  iron  imported  from  England,  whence  the  manu- 


■  The  Free  Trade  Memorial  addressed  to  the  Senate  and  House  of  Representatives  of  the  United  States. 
Albert   Gallatin.     State  Papers  and  Speeches  on  tlte  Tarif.     Taussig,  p.   177. 


44 


The  Old  Protection  Pt.  I 


factures  of  that  metal  are  almost  exclusively  imported,  does  not 
amount  to  $240,000.  Whatever  may  be  the  quantity  of  bar  iron 
used  in  the  manufacture  of  hardware  and  other  articles  thus  im- 
ported, it  interferes  equally  with  American  bar  iron,  whether 
imported  as  a  raw  material  or  in  its  manufactured  state.  If  the 
quantity  thus  used  does  not,  as  is  asserted,  exceed  9,000  tons,  the 
prime  cost  of  which  is  less  than  $350,000,  the  duty  which  prevents  its 
importation  arrests  the  progress  of  those  branches  of  industry  which 
would  otherwise  convert  that  raw  material  into  manufactured  articles, 
worth  $3,500,000.  The  workingmen  who  are  able  and  willing  to  apply 
their  labor  to  this  highly  desirable  and  truly  profitable  object,  do  not 
ask  your  honourable  body  for  any  extraordinary  protection,  but  only 
that  the  impediments  arising  from  an  extravagant  protecting  duty  on 
the  raw  material  be  removed. " 

The  United  States  thus  seems  to  be  doing  the  same  thing  as  England 
before  she  abolished  the  Corn  Laws.  The  taxation  of  raw  materials 
protects  foreign  manufacturers  of  finished  products  and  consequently 
diminishes  the  possible  demand  for  American  labour.  The  illustration 
offered  is  dated  as  far  back  as  1832.  It  might  be  supposed  that  sub- 
sequent legislation  had  altered  this  anomaly,  pointed  out  so  long  ago. 
The  following  passage,  therefore,  may  be  of  interest,  written  by  Mr. 
Atkinson,  with  reference  to  the  same  industries  as  late  as  1904.  In 
refering  to  the  analysis  of  the  iron  and  steel  industries  by  Mr.  Wells, 
already  cited,  Mr.  Atkinson^  says: 

"I  shared  with  him  in  making  this  analysis,  which  is  carefully  guarded, 
is  conservative,  and  is  far  within  the  mark  in  proving  that  in  the  ten 
years  which  elapsed  from  1888  to  1897  the  excess  of  disparity  in  price 
paid  by  the  consumers  of  this  ocuntry  mainly  to  the  producers  of  iron 
and  steel,  stated  by  Mr.  Wells  at  five  hundred  and  sixty  milKon  dollars 
($560,000,000)  was  in  fact  nearer  seven  hundred  millions  ($700,000,000) 
than  the  sum  named.  This  disparity,  whatever  the  price  m.ay  have  been 
in  either  year  in  this  country  or  in  Europe,  rendered  it  impossible  for 
the  converters  of  pig  and  bar  iron  into  machinery  and  the  higher  types 
of  metallurgy  of  this  country  to  compete  with  the  workshops  of  Europe, 
while  the  iron  and  steel  makers  of  the  crude  forms  of  pig,  ingot,  and  bar 
were  enabled  to  convey  enormous  sums  from  the  pockets  of  the  consumers 
into  their  own  quickly  accumulated  wealth.  The  intermediate  con- 
sumers of  these  crude  forms  of  metal,  the  machinists,  the  tool  makers, 

*  Edward  Atkinson.     Farts  and  Figures  the  Basis  of  Economic  Science,  p.   io8. 


Bk.  I  Protection  and  Labour  45 

and  that  vast  body  of  craftsmen  far  more  numerous  than  all  occupied 
upon  the  pig,  bar,  and  rail,  were  restricted  and  oppressed,  while  their 
competitors  in  Europe  were  fully  protected  in  control  of  all  the  markets 
of  the  world  and  in  part  of  the  home  market  in  this  country. " 

These  two  statements  of  certain  industrial  conditions  in  the  United 
States  present  the  action  of  a  system  of  restrictive  taxation  extending 
over  three-quarters  of  a  century.  They  suggest  that  such  taxation  had 
suppressed,  or  rendered  less  productive,  an  incalculable  amount  of  val- 
uable industry,  while  the  capital  actually  employed  under  forced  prices 
merely  employed  labour  in  "laboriously  doing  nothing,"  as  Mill  says. 
Capital  is  not  created  by  import  duties,  but  by  accumulations  saved 
from  productive  industry.  So  far  then  as  industry  is  checked,  or 
rendered  less  productive  by  taxation,  it  seems  safe  to  assume  that  the 
production  of  wealth  and  the  accumulation  of  capital  is  checked  pro- 
portionately. If,  however,  the  accumulation  of  capital  is  checked, 
the  demand  for  labour  will  apparently  be  diminished  at  the  same  time. 
Just  as  the  English  Corn  Laws,  in  checking  English  imports  checked  Eng- 
lish exports  and,  consequently,  the  demand  for  English  labour,  so  must 
all  artificial  checking  of  production  in  any  country  restrict  the  normal 
accumulation  of  capital  in  that  country  and  consequently  restrict  the 
demand  for  labour.  Nor  does  it  seemingly  make  any  difference  to 
what  height  prices  may  be  forced  by  taxation.  Such  forcing  of  prices 
will  simply  protect  the  foreigner  to  a  certain  extent,  and,  as  long  as  a 
mass  of  unemployed  labour  floods  the  centres  of  population,  has  little 
effect  on  wages. 

"The  theory  that  high  prices  make  high  wages,"  says  Mr.  Atkinson,^ 
"is  so  shallow  as  to  make  one  wonder  that  any  man  of  common  sense 
should  present  it.  When  it  is  remembered  that  ninety  (90)  per  cent,  of 
the  demand  for  food,  fuel,  clothing,  and  shelter  is  for  the  supply  of 
small  farmers,  farm  laborers,  common  laborers,  wage-earners,  factory 
operatives,  mechanics,  and  persons  of  small  fixed  incomes,  it  becomes 
plain  that  high  prices  quickly  diminish  consumption  by  leading  to  forced 
economy.  This  tends  at  once  to  lessen  the  demand  for  labor,  to  the  dis- 
charge of  large  numbers  of  workmen,  and  to  efforts  to  reduce  rates  of 
wages;  then  follow  strikes,  and  other  misdirected  efforts  to  get  relief. 
One  may  sympathize  with  the  workmen  under  these  conditions  without 
approving  their  misdirected  methods." 

The  pauper  labour  argument  says  that  a  population  should  tax  itself 

'  Facts  and  Figures  the  Basis  of  Economic  Science,  p.  32. 


46  The  Old  Protection  Pt.  I 

as  protection  against  the  low- wage  foreigner.  What  are  the  facts  in  high 
wage  America  in  one  of  the  most  highly  protected  industries  in  the 
world?  "In  1880,"  says  the  Pittsburgh  Survey,^  "Slavs,  Lithuanians, 
and  Italians  did  not  form  one  per  cent  of  the  population  in  either  Pitts- 
burgh or  Allegheny.  By  1890  they  had  reached  four  per  cent,  and  out 
of  an  army  of  90,000  wage-earners,  one  in  every  ten  was  an  immigrant 
from  southeastern  Europe.  By  1900,  one-third  of  the  foreign-born  were 
of  this  new  immigration,  and  the  movement  of  the  Teutonic  and  Keltic 
races  had  practically  ceased.  We  must  wait  until  the  census  enumera- 
tion of  19 10  before  we  may  definitely  know  what  proportion  these  new- 
comers form  to-day,  but  it  may  safely  be  assumed  that  the  percentage  of 
foreign-born  in  the  greater  city  will  equal  that  of  1900,  thirty  per  cent, 
or  roughly,  200,000,  half  of  whom  will  be  from  southeastern  Europe. 
Poles,  Italians,  and  Jewish  immigrants  head  the  list.  Lithuanians, 
Croatians,  Servians,  Slovaks  and  Ruthenians  are  numbered  by  the 
thousands,  and  Magyars,  Greeks,  Bohemians,  and  Roumanians  are  here 
in  lesser  groups.  .  .  So  the  Slav  gains  his  foothold  in  the  Pitts- 
burgh industries,"  continues  the  Report, ^  "  and  in  the  doing  of  it,  he 
undermines  the  income  of  the  next  higher  industrial  group  and  gains  the 
enmity  of  the  Americans.  Shrewd  superintendents  are  known  not  only 
to  take  advantage  of  the  influx  of  unskilled  labour  to  keep  down  day 
wages,  but  to  reduce  the  pay  of  skilled  men  by  a  gradually  enforced 
system  of  promoting  the  Slavs. " 

This  seems  to  be  the  way  the  pauper  labour  taxes,  and  high  prices, 
keep  up  wages  practically.  They  suppress  the  more  highly  finished  and 
diversified  forms  of  production,  they  congest  capital,  which  might  have 
been  employed  in  these,  in  enormous  accumulations  acting  under  taxa- 
tion; and  then  the  foreign  pauper  labour  is  imported  in  shoals  in  order 
to  compete  in  a  free  trade  laboiir  market  and  keep  wages  at  the  lowest 
possible  level. 

Section  IV — Protected  Labour  in  the  United  States 

If  any  country  in  the  world  can  show  the  practical  realization  of 
protectionist  theories,  that  country  is  the  American  Republic,  not  only 
because  of  its  unlimited  development  of  the  protective  system,  but 
because  its  industrial  career  was  begun  under  the  most  favourable 
conditions,  freed  from  vicious,  inherited  institutions.    A  brief  glance, 

'  Charities  and  the  Commons,  January,  1909,  p.  S34' 
«Ibid..  p.  538. 


Bk.  I  Protection  and  Labour  47 

therefore,  at  the  condition  of  labour  during  two  periods  in  the  United 
States  may  be  presented: 

The  history  of  American  Protection  shows  a  marked  change  since  the 
beginning  of  the  system.  In  the  early  days,  those  in  favour  of  the  policy 
presented  their  petitions  to  legislators  in  carefully  studied  arguments 
requesting  but  a  modest  aid,  and  that,  in  most  cases,  of  a  temporary  kind. 
They  appealed  to  the  generosity  of  the  country,  to  the  intelligence  and 
consideration  of  its  representatives,  as  though  conscious  of  the  dangerous 
ground  upon  which  they  were  treading.  The  granting  of  their  thought- 
ful and  often  deprecatory  petitions  was  regarded  as  a  favour  which  might 
at  any  moment  be  withdrawn.  This  has  entirely  changed  after  a  few 
decades.  The  Civil  War  presented  a  harvest  of  taxes  to  those  enjoying 
governmental  favours  and  served  to  confuse  protective  and  fiscal  meas- 
ures in  the  popular  mind.  There  could  be  but  one  result;  a  great 
strengthening  of  the  protective  position  on  every  side,  and  the  constant 
accumulation  of  new  protective  taxes.  The  arguments  of  a  Clay  or  a 
Hamilton  are  no  longer  heard  nor  needed  —  a  measure  is  simply  pre- 
sented and  looked  after  by  those  interested,  whichever  party  may 
happen  to  be  in  power. 

This  represents  a  complete  triumph  for  Protection;  and  after  three 
quarters  of  a  century  the  practical  realization  of  its  promised  advan- 
tages with  reference  to  labour  may  be  sought.  Upon  protectionist 
theories  the  condition  of  American  labour  must  constantly  improve  and 
its  returns  constantly  increase,  not  only  in  proportion  to  the  increase  of 
the  wealth  of  the  country,  but  in  proportion  to  the  Protection  offered. 
Labour,  it  may  be  expected,  will  become  more  and  more  prosperous  and 
contented;  strikes  will  never  occur;  the  demand  for  labour  "created" 
will  be  out  of  all  relation  to  the  supply;  and  wages  will  mount  in  direct 
proportion  to  the  increase  of  wealth  and  import  duties.  What,  then, 
are  the  facts? 

In  order  to  answer  this  question,  the  condition  of  labour  during  the 
early  decades  of  the  Republic  may  be  compared  with  the  economic 
situation  in  which  labour  finds  itself  to-day.  An  interesting  account 
of  American  labour  during  the  earlier  days  of  the  last  century  is  found 
in  Wakefield's  England  and  America.'^ 

Wakefield  was  the  inventor  of  a  new  phase  of  Protection.  His  experi- 
ence in  the  colonies  having  shown  him,  where  available  land  lay  at  their 
disposition,  that  colonists  could  employ  themselves  independently  of 

•  En^nd  and  America.    E.  G.  Wakefield,  1833. 


48  The  Old  Protection  Pt.  I 

accumulated  capital,  he  observed  that  this  made  uncertain  labour,  high 
wages,  and  placed  capital  at  a  disadvantage  in  new  countries.  He, 
therefore,  suggested  the  protection  of  capital  through  the  taxation  of 
unoccupied  land.  By  fixing  an  artificially  high  price  on  all  undeveloped 
land,  it  was  obvious  that  colonists  upon  their  arrival  would  be  forced 
to  become  wage-workers  for  a  time  at  least,  instead  of  employing  them- 
selves upon  the  land.  By  this  means,  the  effects  of  congested  population 
and  concentrated  wealth  in  old  nations  could  be  artificially  reproduced 
in  the  colonies  and  new  countries.  He  cites  ^  the  case  of  a  certain 
Mr.  Peel,  who  brought  £50,000  and  three  thousand  wage-workers  from 
England  to  flie  Swan  River  colony  in  West  Australia.  On  his  arrival, 
however,  this  unfortunate  capitalist  "was  left  without  a  single  servant 
to  make  his  bed  or  fetch  him  water  from  the  river. "  Wakefield's  theory 
of  colonization  was  suggested  by  the  difficulty  in  combining  capital  and 
labour  in  new  countries.  "If," ^  he  says,  "all  members  of  the  Society  are 
supposed  to  possess  equal  portions  of  capital  ...  no  man  would  have 
a  motive  for  accumulating  more  capital  than  he  could  use  with  his  own 
hands.  This  exists  to  some  extent  in  New  American  settlements  where 
a  passion  for  owning  land  prevents  the  existence  of  a  class  of  labourers  for 
hire."  He  observes^  that  mankind,  as  a  result  of  "concert  and  combina- 
tion," divides  itself  into  owners  of  labour  and  owners  of  capital  as  a 
simple  contrivance  for  promoting  the  accumulation  of  capital.  There 
seems,  however,  in  his  time,  to  have  been  a  lamentable  lack  of  this  wise 
"concert  and  combination"  in  America.  He  says:*  "In  the  northern 
states  of  the  American  Union  it  may  be  doubted  whether  so  many 
as  a  tenth  part  of  the  people  would  fall  under  the  description  of 
hired  labourers.  ...  In  England  the  labouring  class  compose  the 
bulk  of  the  population."  "Where  land  is  very  cheap,"  he  continues,^ 
"and  all  men  are  free,  where  everyone  who  so  pleases  can  easily 
obtain  a  piece  of  land  for  himself,  not  only  is  labour  very  dear, 
as  respects  the  labourers'  share  of  the  produce,  but  the  difficulty 
is  to  obtain  combined  labour  at  any  price."  The  result  of  these  con- 
ditions is,  naturally,  that  in  new  coimtries  capital  does  not  show  the 
same  tendency  to  concentration  as  in  older  industrial  societies;  on  the 
contrary,   under  such  conditions,   capital   evinces  an  inclination  to 


>  Vol  II,  p.  33. 

»  Vol.  I.,  p.  17. 

»  Ibid.,  p.  18. 

*  Ibid.,  pp.  42.  43.  44* 

'  Ibid.    p.  247. 


Bk.  I  Protection  and  Labour  49 

scatter  itself  throughout  the  community.  "A  barbarizing  tendency 
to  dispersion,"  as  Wakefield^  puts  it.  The  wage-earner  has,  in  fact, 
means  at  his  disposal  of  becoming  a  capitalist  himself.  This  is  the 
picture  Wakefield  presents  of  the  condition  of  American  labour  during 
the  early  days  of  the  Union.  However,  all  is  not  so  dark:  "The  Ameri- 
cans are  the  only  people  in  the  world,"  he  says,^  "blessed  with  leisure 
and  equality."  "The  evils  of  society,  misery  and  vice  produced  by 
misery,  are  unknown  in  America."^  "But  in  what  country,"  he 
asks,^  "except  North  America  and  some  new  colonies,  do  the  wages 
of  free  labour  employed  in  agriculture  much  exceed  a  bare  subsistence 
for  the  labourer  .  .  .  undoubtedly  farm-horses  in  England,  being  a 
valuable  property,  are  better  fed  than  English  peasants.  The  peasant 
of  the  South  of  England  suffers  nearly  all  the  evils,  but  enjoys  none  of 
the  advantages  of  slavery. "  .  .  .  He  relates^  a  conversation  with 
some  American  capitalists  who  said:  "Our  capital  was  ready  for  many 
operations  which  require  a  considerable  period  of  time  for  their  com- 
pletion; but  we  could  not  begin  such  operations  with  labour  which,  we 
knew,  would  soon  leave  us.  If  we  had  been  sure  of  retaining  the  labour 
of  such  emigrants,  we  should  have  been  glad  to  have  engaged  it  at  once, 
and  for  a  high  price:  and  we  should  have  engaged  it,  even  though  we 
had  been  sure  it  would  leave  us,  provided  we  had  been  sure  of  afresh 
supply  whenever  we  might  need  it. " 

There  seems  no  reason  to  doubt  these  statements  of  Wakefield;  they 
are  but  typical  of  the  expressions  of  writers  dealing  with  the  same  period 
in  America.  "The  Americans  are  nearly  all  in  easy  circumstances," 
says  de  Tocqueville.^  "Among  the  new  things  in  America  nothing 
struck  me  more  forcibly  than  the  general  equality  of  condition  among  the 
people."^  "Sixty  years  ago,"  says  Bryce,^  "there  were  no  great 
fortunes  in  America,  few  large  fortunes,  no  poverty. " 

These  are  the  conditions  in  the  United  States  during  the  earlier 
decades  of  their  existence.  They  may  be  compared  with  existing  labour 
conditions  after  nearly  three  quarters  of  a  century  of  constant  accum- 
ulations of  protective  taxes.    This  may  be  done  through  the  figures  of 

»VoL  n.  p.  S2- 

«  Vol.  I.,  p.  328. 

•  Ibid.,  p.  32s. 

•  Ibid.,  pp.  246,  247,  47. 

•  Vol.  II.,  pp.  igi,  192. 

'■  De  la  Democratic  en  Amlrique.       Tome  i.,  p.  83.' 

»  Ibid.,  p.  I. 

'  The  American  Commonwm.lfh.  iSoS-  Vol.     II,  p.  743. 


50  The  Old  Protection  Pt.  I 

census  returns,  in  connexion  with  poverty  and  unemployment.  There 
exist  several  such  studies,  that  of  Mr.  Robert  Hunter  in  his  work 
Poverty  is  among  the  more  recent;  he  says:^  "The  figures  of  un- 
employment, although  very  imperfect,  show  that  the  evil  is  widespread, 
even  in  times  of  prosperity.  The  census  of  1890  shows  that  3,523,730, 
or  1 5. 1  per  cent  of  all  of  the  workers  over  ten  years  of  age,  engaged  in 
gainful  occupations,  were  unemployed  a  part  of  the  time  during  that 
year  (Vol.  on  Occupations,  pp.  ccxxviii  et  seq.).  These  figures  are,  how- 
ever, criticised  by  the  census  of  1900  as  incomplete.  In  the  last  census 
the  number  found  to  be  unemployed  at  some  time  during  the  year  was 
6,468,964,  or  22.3  per  cent  of  all  the  workers  over  ten  years  of  age 
engaged  in  gainful  occupations  {Idem,  p.  ccxxvi).  Thirty-nine  per  cent 
of  the  male  workers  unemployed,  or  2,069,546  persons,  were  idle  from 
four  to  six  months  of  the  year  {Idem,  p.  ccxxxv).  These  figures  are  for 
the  country  as  a  whole,  and  for  all  industries,  including  agriculture.  In 
manufacturing  alone  the  unemployment  rose  to  27.2  per  cent  of  all 
workers."  Again  he  says,^  "The  total  number  of  paupers  in  the  United 
States  in  the  year  1891  was  about  3,000,000,  according  to  the  estimates 
of  Prof.  Richard  To  Ely  and  of  Mr.  Charles  D.  Kellogg,  then  Secretary 
of  the  Charity  Organization  Society  of  New  York  City  {North  American 
Review,  April,  1891).  .  .  .  There  is  every  indication  that  not  less 
than  4,000,000  persons  are  now  dependent  upon  the  public  for  relief." 
After  presenting  the  necessary  data  with  reference  to  the  number  of 
evictions  and  pauper  burials,  he  observes:^  On  the  basis  of  these  figures 
it  would  seem  fair  to  estimate  that  certainly  not  less  than  14  per  cent  of 
the  people,  in  prosperous  times  (1903),  and  probably  not  less  than  20 
per  cent  in  bad  times  (1897),  are  in  distress. " 

These  estimates  embrace  the  population  at  large;  a  brief  notice,  there- 
fore, of  the  condition  of  labour  employed  in  some  of  the  oldest  and  most 
highly  protected  industries  of  the  country  may  be  of  interest,  as  the 
protective  theory  requires  that  such  industries  protect  labour,  and 
raise  wages.  The  Pittsburgh  Survey  of  Charities  and  the  Commons  for 
March,  1909  (p.  1035)  furnishes  material  for  such  a  notice.  What, 
then,  are  the  conditions  of  labour  "protected"  for  three  quarters  of  a 
century? 

I.  An  altogether  incredible  amount  of  overwork  by  everybody, 


*  Poverty.    Robert  Hunter,  p.  28. 
'  Ibid.,  pp.  20,  21. 

•  Ibid.,  p.  25. 


Bk.  I  Protection  and  Labour  51 

reaching  its  extreme  in  the  twelve-hour  shift  for  seven  days  in  the  week 
in  the  steel  mills  and  the  railway  switch-yards. 

II.     Low  wages  for  the  great  majority  of  the  labourers  employed 
by  the  mills. 

UI.     Still  lower  wages  for  women. 

IV.    An  absentee  capitalism,  with  bad  effects  strikingly  analogous 
to  those  of  absentee  landlordism. 

V.    A  continuous  inflow  of  immigrants  with  low  standards. 
VI.    The  destruction  of  family  life. 
VII.     Archaic  social  institutions. 

VIII.  The  contrast  between  the  prosperity  on  the  one  hand  of  the 
most  prosperous  of  all  the  communities  of  our  western  civilization 
.  .  .  and,  on  the  other  hand,  the  neglect  of  life,  of  health,  of  physi- 
cal vigour,  even  of  the  industrial  efficiency  of  the  individual. 

What  are  the  practical  effects  upon  a  population  "protected"  in  this 
way?  A  glance  at  the  rising  generation  is  the  best  answer.  "Not  one 
child  in  ten, "  says  ^  a  settlement  worker,  "  comes  to  us  from  the  river- 
bottom  section  without  a  blood  or  skin  disease,  usually  of  long  standing. 
Not  one  out  of  ten  comes  to  us  physically  up  to  the  normal  of  his  or  her 
age.  Worse  than  that,  few  of  them  are  up  to  the  mental  standard,  and 
an  increasing  percentage  are  imbecile."  "London's  East  End  is  open 
for  the  inspection  of  travelling  Pittsburghers, "  continues  Mr.  Adams,  ^ 
"There  they  may  see  in  its  fullness  the  crop  of  pauperism,  depend- 
ence, and  degeneracy  which  is  bred  in  the  third  and  fourth  generations,  of 
conditions  no  worse  than  their  own  average,  and  not  so  bad  as  their 
own  worst." 

The  political  and  administrative  conditions  which  such  a  protected 
population  will  breed  are  of  no  less  significance  than  its  children.  "It 
has  been  the  boast  of  this  country,"  says  the  report,  (p.  857),  "that  the 
judiciary  is  not  swayed  by  politics,  but  here  in  the  subordinate  courts 
we  have  a  branch  of  the  judiciary  so  steeped  in  politics  that  the  squire's 
office  as  a  campaign  centre  and  a  place  of  political  organizing  rivals  the 
saloon."  "I  have  it  on  good  authority,"  says  Mr.  Fitch,  (March,  p. 
1090)  "that  before  the  primaries  of  May,  1908,  orders  came  from  the 
New  York  office  of  the  United  States  Steel  Corporation,  to  the  general 
superintendent  of  the  Edgar  Thompson  plant  at  Braddock,  directing 
him  to  order  the  department  superintendents  to  line  up  their  employes 

1  Ibid.,  Febniary,  p.  945. 
'  Ibid.,  p.  946. 


52  The  Old  Protection  Pt.  I 

for  the  Penrose  candidates  for  the  Legislature.  The  general  superin- 
tendent called  a  meeting  of  the  department  superintendents  and  delivered 
the  orders.  This  created  some  dismay,  for  local  option  was  an  issue  in 
in  the  primaries,  and  the  Penrose  candidates  were  opposed  to  local  option. 
Some  of  the  superintendents  were  already  prominently  identified  with 
the  local  option  party  and  had  been  assisting  in  organizing  the  campaign 
How  they  could  with  honour  and  self-respect  abandon  the  issue  at  that 
point  was  not  clear  to  the  officials.  But  the  answer  to  their  objections 
was  clear  and  to  the  point.  They  were  told  to  break  any  and  all  prom- 
ises and  to  work  for  Penrose,  because  the  United  States  Steel  Cor- 
poration needed  him  in  the  Senate.  It  is  probably  unnecessary  to  add 
that  Penrose  carried  Allegheny  County. " 

This  superlatively  protected  labour  is  here  found  "  encouraged  "  by  an 
increasing  flood  of  pauper  labour  constantly  tending  to  reduce  wages  to 
the  lowest  foreign  standard,  while  an  absentee  capitalism  absorbs  the 
millions  taxed  out  of  the  population  and  dictates  to  the  voter  and  his 
so-called  representative  at  Washington. 

The  population  of  the  United  States  may  thus  be  seen  beginning  its 
economic  existence  under  the  most  favourable  conditions;  in  possession 
of  vast  and  undeveloped  land  area,  ample  and  evenly  distributed  wealth, 
and  free  from  inherited  industrial  and  social  evils.  This  same  popula- 
tion may  again  be  observed  reproducing  with  extraordinary  rapidity 
all  the  social  diseases  of  older  societies:  abnormal  accumulations  of 
wealth,  unemployment,  pauperism,  labour  problems,  and  widely  ex- 
tended poverty  with  their  attendant  evils  of  political  dependence,  vice, 
oppression,  and  distress;  this  change  occurring,  moreover,  during  the 
most  rapid  increase  in  national  wealth  and  protective  taxes  that  the 
world  has  seen. 

There  is  reason  to  believe  that  the  real  factors  in  fixing  the  rate  of 
wages  are  supply  and  demand  in  the  labour  market,  and  not  import 
duties.  Free  trade  England,  without  a  single  protective  duty,  presents 
all  the  problems  of  labour  and  poverty  found  in  the  over  protected 
Germany  and  United  States.  When  unlimited  and  undeveloped  land  lay 
at  the  disposition  of  the  population,  labour  not  only  possessed  op- 
portunity for  self  employment,  but  the  capacity  for  the  absorption 
of  unemployed  masses  always  existed  in  the  land.  Thus,  until  the 
land  is  occupied,  evenly  distributed  wealth  and  no  poverty  are  found  in 
the  United  States;  with  the  absorption  of  the  land  the  population  is  con- 
gested in  the  cities  and  poverty  and  unemployment  appear.    Other 


Bk.  I  Protection  and  Labour  53 

things  equal,  there  is  reason  to  believe,  were  the  population  of  the  United 
States  suddenly  increased  to  the  same  relative  density  as  those  of  India 
or  China,  that  wages  in  America  would  at  once  fall  to  the  wage  level  in 
those  countries,  and  that  such  a  fall  would  occur  independently  of  the 
amount  of  import  duties  or  the  tariff  schedules. 

Thus,  instead  of  a  protectionist  paradise  in  the  United  States,  the 
population  is  found  following  the  same  lines  of  economic  develop- 
ment as  those  followed  by  all  other  populations.  It  reproduces 
the  same  phenomena  in  relation  to  the  distribution  of  its  wealth 
as  free  trade  England  or  protected  Germany,  and  the  fact  that  the 
returns  to  labour,  although  they  seem  to  have  fallen  rapidly  during 
the  past  sixty  or  eighty  years,  have  not  yet  reached  the  level 
in  England,  Germany  or  China,  is  due  to  the  fact  that  the  popula- 
tion has  not  yet  reached  the  same  relative  density  to  its  capital 
and  land  area  as  that  of  those  countries.  If  the  high  wage  of  England 
is  cited  in  relation  to  wages  of  Italy  and  Greece,  it  is  obvious  that  this 
difference  is  not  caused  by  protective  import  duties,  but  by  the  greater 
demand  in  the  laboiu:  market.  Thus  when  the  relatively  high  wage  of 
the  United  States  is  advanced  as  caused  by  protective  taxes,  it  is  as 
though  the  rise  of  the  tide  were  traced  to  a  dam.  Wages  are  higher  in 
the  United  States  than  elsewhere  because  of  the  natural  resources  of  the 
country  and  the  large  land  area  in  relation  to  the  population,  and  not 
because  of  taxes  on  imports. 

Few  men  bring  a  wider  knowledge  of  the  subject  to  the  formulation 
of  an  opinion  with  reference  to  the  relation  of  labour  and  protective 
taxation  than  Thorold  Rogers^  and  no  study  of  the  subject  could  be 
better  closed  than  in  his  words: 

''In  the  United  States  the  process  is  being  exhibited  on  the  most 
gigantic  scale.  The  freest  people  in  the  world,  where  administrations 
and  parliaments  have  been  able  to  study  and  avoid  the  errors  and  crimes 
which  older  governments  have  committed  against  labour,  have  sub- 
mitted to  a  tariff  which  clips  the  wages  of  the  w^orkman  to  the  extent  of 
50  per  cent.,  under  the  pretence  of  supplying  him  with  variety  of  em- 
ployment. It  is  a  trifle  that  heavy  duties  are  imposed  on  a  few  foreign 
luxuries,  except  in  so  far  as  they  give  a  semblance  of  equity  to  those 
which  are  laid  on  common  necessaries,  on  the  clothing  of  the  workmen, 
on  his  tools,  on  the  farmer's  implements  of  husbandry.  The  motive 
of  the  impost  is,  of  course,  to  increase  the  profits  of  capital;  and  this  has 

»  Work  and  Wages.    Thorold  Rogers,  M.  P.,  p.  SS2. 


54  The  Old  Protection  Pt.  I 

hitherto  been  the  result,  and  the  impoverishment  and  dependence  of 
labour  —  a  consequence  as  certain  though  not  so  manifest.  The  more 
remote  but  inevitable  consequence,  a  bitter  distrust  and  growing  enmity 
of  the  labourer  toward  the  employer,  has  been  occasionally  seen  in  the 
fvirious  outbreaks  which  have  from  time  to  time  occurred  in  America, 
and  are  likely  to  recur  whenever,  as  is  frequent  in  protected  trades,  a 
great  depression  comes  over  a  special  industry. 

"From  sheer  folly,  or  from  interested  motives,  a  belief  that  better 
profits  would  ensue  to  employers,  or  in  order  to  serve  party  ends  by 
giving  a  false  interpretation  of  economical  phenomena,  there  are  persons 
who  are  foolish  or  wicked  enough  to  advocate  the  return  to  a  protective 
policy  in  England  under  the  name  of  fair  trade.  The  good  sense  of  the 
better  educated  and  more  experienced  English  workman  shows  him  that 
his  acceptance  of  this  doctrine  would  be  nugatory  in  articles  of  voluntary 
use,  and  suicidal  in  those  of  necessary  use,  and  he  has,  therefore,  rejected 
the  suggestion." 


Book  II 

THE     NEW     PROTECTION 
CHAPTER  I 

ANALYSIS  OF  THE  NEW  PROTECTION 


A  STUDY  of  the  older  phases  of  Protection  on  both  sides  of  the 
Atlantic  dwells  upon  those  aspects  of  protective  theory  which 
have  played  their  part  in  economic  controversy  since  the  days 
of  Adam  Smith  and  long  before;  it  deals  with  that  school  of 
economic  thought  to  which  the  Scottish  philosopher  is  sometimes 
assumed  to  have  given  the  death-blow,  and  which  Mill,  in  his  time, 
regarded  as  a  false  theory  and  a  negligible  quantity  in  England  at  least.  ^ 
How  far  this  death-blow  has  proven  effective  may  be  judged  by  the 
degree  in  which  the  nations  of  the  Old  and  the  New  Worlds  have  aban- 
doned or  maintained  fiscal  restrictions  upon  their  trade  and  industry. 
The  extent  to  which  Protection  maybe  regarded  as  a  negligible  quantity 
in  England  is  shown  by  its  prominence  or  the  reverse  upon  the  horizon 
of  English  politics  to-day. 

England  has  represented  for  the  past  half  century  the  freest  com- 
mercial system  in  the  world;  she  has,  as  it  were,  been  the  standard  bearer 
of  that  Liberalism  invoked  by  Adam  Smith,  which  Bright  and  Cobden 
helped  to  carry  to  one  successful  issue  at  least;  the  Liberalism  associated 
with  the  names  of  Burke,  Peel,  Gladstone,  Morley  and  a  host  of  able 
Englishmen  instrumental  in  obtaining  the  repeal  of  the  Com  Laws. 
The  year  1848  marked  a  turning  point  in  English  history,  when  the  laws 
taxing  the  food  of  the  people  were  repealed  and  England  stood  alone 
among  the  nations  of  the  world,  with  unprotected  industry  and  unpro- 
tected labour.  Such  an  experiment,  on  so  vast  a  scale,  imdertaken  by  one 
of  the  leading  industrial  and  commercial  nations  of  the  world,  must  be 
among  the  most  instructive  events  in  economic  history.  The  practical 
outcome  of  such  a  policy  must  apparently  be  conclusive,  and  after 

'  Principles  of  Political  Economy,  Bk.  V.,  ch.  x.,  §  i,  p.  S52. 

55 


56  The  New  Protection  Pt.  I 

half  a  century  of  unrestricted  commerce  demonstration  reached  in  the 
controversy  between  Protection  and  Free  Trade. 

By  many  so  it  is  supposed  to  be.  One  dif5culty  alone  remains:  the 
free-trader  regards  the  results  as  demonstrating  his  original  position, 
while  the  protectionist  points  to  the  same  results  and  remarks  that,  now, 
at  last,  Free  Trade  has  been  put  to  the  test  of  experience,  and 
proved  inadequate.  The  discussion  remains  much  as  at  first,  except 
that  new  conditions  and  readjustments  in  industrial  and  commercial 
affairs  have  formed  a  new  basis  for  protective  considerations,  not  avail- 
able under  a  less  highly  developed  system  of  production  and  distribution. 
The  citation  of  Smith  and  Mill  with  reference  to  latter-day  Protection  is, 
to  the  minds  of  many,  as  though  the  authority  of  a  mediaeval  astrologer 
were  invoked,  in  order  to  disprove  modern  astronomical  theory.  The 
New  Protection  has  passed  beyond  the  age  to  which  the  demonstrations 
of  Mill  and  Smith  applied.  It  takes  its  origin,  it  is  said,  from  conditions 
political,  economic,  and  industrial,  of  which  the  earlier  economists  knew 
nothing,  owing  to  the  extraordinary  changes  in  productive  and  distribu- 
tive methods  of  the  past  few  decades. 

"The  new  era  of  Protection,"  says  Professor  Schmoller,^  "has  arisen 
not  because  economists  and  statesmen  have  been  unable  to  understand 
the  beautiful  arguments  of  Free  Trade,  nor  because  a  few  monopolists 
and  manufacturers  have  dominated  the  Government:  it  has  arisen  from 
the  natural  instincts  of  the  peoples.  It  does  not  only  rest  —  in  many 
cases  it  does  not  primarily  rest  —  on  List's  doctrine  of  educative  tariffs 
(the  'productive  powers'  or  'infant  industries'  argument);  it  arises 
from  a  motive  which  is  rather  instinctively  felt  than  clearly  understood 
viz.,  that  tariffs  are  international  weapons  (Machtmittel)  which  may 
benefit  a  country,  if  skillfully  used. " 

Considerations  such  as  these  present  a  new  field  of  inquiry.  The 
new  protectionist  questions  or  denies  the  majority  of  the  conclusions 
of  Smith  and  Mill  with  reference  to  the  earlier  phases  of  the  protective 
system;  he  may  go  farther  than  this,  and  accept  the  majority  of  their 
demonstrations,  but  base  his  opinion  upon  later  conditions  with  which 
they  were  unfamiliar;  or  he  may  complete  the  circle  of  his  economic 
evolution  and  cite  isolated  passages  from  Smith  and  Mill  in  order  to  dis- 
prove the  body  of  their  own  conclusions.  This  is  a  familiar  attitude  in  the 
New  Protection  and  renders  it  impossible  to  disregard  the  opinion  of  these 
writers,  although  the  value  of  their  views  is  questioned  at  the  outset. 

'  Schriflen  des  VereinsfOr  Socialpoliiik,  quoted  by  Professor  Ashley.     The  Tarif  Problem,  p.  30- 


Bk.  II  Analysis  of  the  New  Protection  57 

The  Old  Protection  still  meets  most  of  the  mental  needs  of  the  United 
States.  Until  recently,  beyond  the  lowering  or  revision  of  duties,  the 
policy  has  been  little  discussed  in  practical  affairs,  and  a  few  references 
to  the  "infant  industry,"  ^'pauper  labour,"  or  the  ''balance  of  trade," 
generally  suffice  to  lull  the  population  into  intellectual  security. 
The  greater  political  experience  and  knowledge  of  the  older  world,  how- 
ever, demand  other  sedatives.  These  are  supplied  by  the  new  school  of 
Protection.  England,  because  of  her  Free  Trade,  and  Germany,  owing 
to  her  recent  industrial  activity,  are  the  two  nations  in  which  the  New 
Protection  has  taken  deepest  root,  and  which  present  conditions  most 
favourable  to  its  growth.  In  these,  as  in  other  countries,  however,  the 
modern  aspects  of  the  protective  policy  may  be  used  simply  as  develop- 
ments of  the  older  phases,  they  may  be  advanced  in  conjunction  with,  in 
addition  to,  or  entirely  independent  of,  the  more  familiar  system.  In 
some  ways  the  New  Protection  is  distinct  from  the  Old,  in  others  they  are 
interwoven  so  intimately  as  to  become  indistinguishable.  This  makes 
it  difficult  at  times  to  reduce  the  New  Protection  to  clear  statement, 
independent  of  the  classic  school.  The  popular  system  has  therefore 
been  reviewed,  as  reference  to  it  is  often  necessary  in  a  study  of  the 
later  positions. 

An  examination  of  the  chief  writers  and  statesmen  dealing  with  the 
New  Protection  in  England  and  Germany  will,  in  all  likelihood,  permit 
the  grouping  of  its  canons  under  the  six  following  propositions: 

I.  Protective  taxation  may  be  used  to  advantage  in  the  development 
of  productive  potentialities,  or  potential  values. 

II.  Protective  taxation  may  act  advantageously  in  the  attraction  of 
foreign  capital. 

in.  Tariff  schedules  present  an  effective  diplomatic  lever,  or  weapon,  in 
the  negotiation  of  treaties,  the  formulation  of  trade  advantages,  and  in  ob- 
taining concessions,  both  commercial  and  political,  from  other  nations. 

rV.  The  import  duty  may  be  profitably  used  in  the  support  and 
protection  of  long  established  and  important  national  industries  threat- 
ened by  unfair  competition,  or  "dumping,"  of  foreign  producers,  and 
also  as  a  means  of  insuring  the  foreign  market  as  far  as  possible  to  the 
home  producer. 

V.  Imperialism,  the  assurance  of  national  industrial  independence, 
food  supply  and  so  forth. 

VI.  Progress. 


58  The  New  Protection  Pt.  I 

Notwithstanding  the  great  variety  of  positions  from  which  Protection 
maybe  viewed,  and  the  changing  nature  of  the  grounds  upon  which 
it  may  be  supported,  there  are  few  considerations  in  favour  of  the 
protective  import  duty  not  to  be  grouped,  either  with  the  conventional 
Protection,  or  under  one  or  more  of  these  six  headings  of  the  later  school, 
ranging  from  productive  potentialities  to  progress  in  its  widest  applica- 
tion. These  six  positions  of  the  New  Protection  may  therefore  be  ex- 
amined. 


CHAPTER  n 

PRODUCTIVE    POTENTIALITIES 


THE  doctrine  of  Adam  Smith ^  is  that  "No  regulation  of  com- 
merce can  increase  the  quantity  of  industry  in  any  society 
beyond  what  its  capital  can  maintain."  If,  therefore,  any 
industry  is  maintained  by  artificial  means,  it  can  exist  but 
through  the  creation  of  prices  higher  than  necessary;  in  other  words, 
through  national  loss,  to  an  extent  proportionate  to  the  increased  price. 

The  popular  Protection  demurs  at  the  acceptance  of  this  position;  the 
New  Protection,  on  the  contrary,  recognizes  it  as  fundamental,  economic 
truth;  pointing  out,  however,  that  this  position,  although  true,  is  true 
as  referring  to  present,  or  existing,  values  alone;  which  leaves  the  question 
of  future  possibilities  untouched.  "  Protection,"  says  Professor  Ashley,^ 
"always  involves  at  first  a  loss  —  not,  indeed,  always  proportionate  to 
the  tariff;  this  is  a  Free  Trade  exaggeration  to  which  I  shall  return  later 
—  a  loss  which  is  expressed  in  the  easiest  way  by  saying  that  the  con- 
sumer has  to  pay  more  than  he  otherwise  would  for  the  protected  com- 
modities. If  he  does  not,  Protection  is  unnecessary.  But  everything 
turns  upon  the  words  at  first. " 

Roscher^  puts  the  case  as  follows:  "The  sacrifices  which  the  protec- 
tive system  directly  imposes  on  the  national  wealth  consist  in  products, 
fewer  of  which,  with  an  equal  straining  (Anstrengung)  of  the  productive 
forces  of  the  country,  are  produced  and  enjoyed  than  free  trade  would 
procure.  But  it  is  possible  by  its  means  to  build  up  (bilden)  new  pro- 
ductive forces,  to  awaken  slumbering  ones  from  their  sleep,  which,  in  the 
long  run,  may  be  of  much  greater  value  than  those  sacrifices.  Who 
would  say,"  he  asks,  "that  the  cheapest  education  is  always  the  most 
advantageous?"  He  cites  List's^  contrast  of  "two  owners  of  estates 
each  of  whom  has  five  sons,  and  can  save  i,ooo  thalers  a  year.    The  one 


»  The  Wealth  of  Nations,  Bk.  IV.,  ch.  ii.,  p.  26. 
'  The  Tarijf  Problem,  p.  24. 

•  Roscher,  Political  Economy,  Lalor's  Translation,  Vol.  II.,  p.  432, 

*  List,  Nationales  System  der  polit.    Oeconomie,  Kap — 12. 

59 


6o  The  New  Protection  Pt.  I 

brings  his  sons  up  as  tillers  of  the  ground  iBauern=pesLsa,nts)  and  puts 
his  savings  out  at  interest.  The  other,  on  the  contrary,  has  two  of  his 
sons  educated  as  rational  (rationelle)  agriculturists,  and  the  others  as 
intelligent  industrial  workers,  and  at  a  cost  which  prevents  the  possi- 
bility of  his  accumulating  any  more  capital.  Which  of  the  two  has  cared 
better  for  the  standing,  wealth,  etc.,  of  his  posterity;  the  adherent  of 
the  'theory  of  exchangeable  values,'  or  the  adherent  of  the  doctrine 
of  'productive  forces'?"  The  "scientific  Protection"  of  List  is  here 
met;  the  position  which  List,  in  the  words  of  Professor  Ashley,^ 
has  "made  the  basis  of  his  Protectionist  doctrine.  As  List  phrased  it, 
the  question  of  the  productive  powers  of  a  country  and  their  possible 
development  is  far  more  important  than  that  of  present  values;  it  might 
be  well  worth  whUe  to  incur  a  loss  for  a  time  in  order  to  secure  a  more 
than  proportionate  future  gain." 

The  import  duty  is  here  urged  as  of  economic  advantage  on  the  grounds 
that  permanent  and  relatively  greater  industrial  values  may  be  developed 
by  sustaining  a  temporary  loss;  that,  while  prices  may  be  increased 
temporarily,  they  may  be  lowered  permanently,  thus  creating  eventually 
more  than  compensating  gain.  In  other  words,  it  is  impossible,  appar- 
ently, to  distinguish  between  the  "productive  powers  "of  the  modern 
"scientific  Protection"  and  the  "infant  industry"  of  the  classic  Protec- 
tion. They  are,  it  seems,  identical;  and  nothing  can  be  urged  in  favour 
of  one  not  to  be  urged  in  favour  of  the  other  with  equal  validity. 
Professor  Schmoller  speaks  of  them  as  identical.  Professor  Ashley  brings 
up  the  well-worn  passage  from  Mill  in  their  support.  The  familiar  in- 
dustrial nursling  appears  once  more;  and,  if  such  backward  offspring  are 
to  be  educated,  there  is  reason  to  believe  that  the  proper  method  is  with 
direct  bounties,  and  not  with  import  duties;  for  in  this  way  alone  may 
the  whole  protective  programme  be  avoided,  and  the  artificial  tax 
removed,  when  it  is  time  for  the  productive  powers  to  be  realized  in 
fact,  and  not  in  theory  alone.  In  this  way  no  future  loss  is  necessarily 
entailed;  the  "powers"  are  given  every  chance  to  develop,  and  the 
people  may  estimate  what  they  cost  in  pounds,  shillings,  and  pence  in 
relation  to  "present  values." 

Mill  may  be  quoted  in  support  of  the  infant  undertaking,  the  passage 
having  been  discussed  at  length  with  a  direct  view  to  these  productive 
potentialities  of  the  New  Protection.  It  would  be  interesting  to  know 
the  total  general  effect  of  Mill's  influence  in  connexion  with  Protection; 

t    *  The  Tarif  Problem,  pp.  25,  26. 


Bk.  II  Productive  Potentialities  6i 

it  would  not  be  surprising,  owing  to  this  single  passage,  if  the  total  net 
result  of  his  writings  had  not  been  much  in  favour  of  the  protective 
theory,  rather  than  the  reverse;  although  their  entire  tendency  is  dia- 
metrically opposed  to  it.  Bright  is  quoted ^  as  saying  that  this  one  pas- 
sage "would  cause  more  injury  to  the  world  than  all  his  writings  would 
do  good";  and,  as  Professor  Ashley  says,  speaking  of  Mill's  free  trade 
friends,  "they  were  quite  right  in  their  alarm."  Wherever  the  infant 
industry  argument  is  heard  for  a  moment,  full-grown  Protection  is  a 
foregone  conclusion. 

This  celebrated  passage  may  be  cited  in  such  a  way  that  it  seems  to 
lend  vastly  more  support  to  the  infant  industry  than  Mill  intended. 
The  New  Protection  appropriates  the  passage  as  follows :2  "Protective 
duties  can  be  defensible,  on  mere  grounds  of  political  economy,  when 
they  are  imposed  temporarily  (especially  in  a  young  and  rising  nation) 
in  hopes  of  naturalizing  a  foreign  industry  in  itself  perfectly  suitable  to 
the  circumstances  of  the  country. " 

Quoted  in  this  way,  the  passage  seems  to  imply  —  as  Mill  regarded 
protective  duties  as  "defensible  upon  mere  grounds  of  political 
economy,"  especially  under  certain  conditions  —  that  he  regarded 
them  as  defensible  upon  other  grounds  and  under  other  conditions  as 
well.  In  Mill's  Principles  of  Political  Economy  appear  the  following 
words  :3 

"The  only  case  in  which,  on  mere  principles  of  political  economy, 
protecting  duties  can  be  defensible,  is"  et  cetera  .  .  .  The  original 
passage  may  suggest  that  Mill  regarded  protective  duties  as  defen- 
sible, upon  mere  principles  of  political  economy,  imposed  temporarily, 
in  a  single  isolated  instance;  but,  as  indefensible  upon  other  grounds 
and  under  other  conditions. 

In  this  connexion,  the  following  passage  from  Mill's"*  letter  to  Mr. 
G.  K.  Holden  of  New  South  Wales,  in  1868,  is  of  interest:  "I  have  not 
altered  the  opinion  that  such  encouragement  is  sometimes  useful,  and 
that  in  many  cases  the  most  just  mode  in  which  it  could  be  given  is  that 
of  a  temporary  protecting  duty,  on  condition  that  it  should  be  known 
and  declared  to  be  merely  temporary,  and  of  no  very  long  duration. 
But  I  confess  that  I  almost  despair  of  this  general  understanding  being 
ever  practically  established.     I  find  that  in  Australia  Protection  is  not 

1  Mr.  Carnegie.     Empire  of  Business,  cited  by  Professor  Ashley,  The  Tariff  Problem,  p.  24. 

2  Professor  Ashley,  The  Tariff  Problem,  p.  24. 

'  Professor  Ashley's  edition  of  Mill  is  cited.     Bk.  V.,  ch.  x.,  §  i  p.  922. 
:    *  Letters  of  John  Stewart  Mill.  Vol.  II.,  p.  116. 


62  The  New  Protection  Pt.  I 

advocated  in  this  form  nor  for  this  purpose,  but  that  the  vulgarest  and 
most  exploded  fallacies  are  revived  in  its  support, " 

These  considerations  led  Mill  to  abandon  his  infant  industry  position, 
as  is  shown  in  his  letter^  to  Mr.  A.  M.  Francis  of  Queensland,  in  1869: 
"The  only  opinion  I  intended  to  withdraw  was  that  which  recommended, 
in  certain  cases,  temporary  protective  duties  in  new  countries  to  aid  the 
experimental  introduction  of  new  industries.  And  even  on  this  point 
I  continue  to  think  that  my  opinion  was  well  grounded,  but  experience 
has  shown  that  protectionism,  once  introduced,  is  in  danger  of  perpetu- 
ating itself  through  the  private  interests  it  enlists  in  its  favour,  and  I 
therefore  now  prefer  some  other  mode  of  public  aid  to  new  industries, 
though  in  itself  less  appropriate."  Thus,  when  the  New  Protection 
cites  Mill  in  support  of  the  Protection  of  the  infant  industry,  it  is  citing 
him  in  support  of  a  position  which  he  finally  abandoned. 

It  is  also  of  interest  to  note  how  the  name  even  of  Adam  Smith  may 
be  used  in  support  of  this  phase  of  the  New  Protection.  With  reference 
to  the  position  that  the  productive  powers  of  a  country  may  be  of  greater 
importance  than  present  values,  Professor  Ashley ^  says:  "Considera- 
tions such  as  these  were  not  absolutely  unknown  to  Adam  Smith;  it  is 
remarkable  how  many  ideas  which  we  are  wont  to  ascribe  to  later  times 
are  to  be  found  somewhere  in  his  pages.  He  recognises  that '  advantages ' 
are  not  always  'natural';  they  may  be  'acquired,'  and  the  effect  will  be 
just  the  same.  But  against  the  obvious  reply  that  some  countries  may 
have  advantages  still  to  '  acquire, '  he  has  absolutely  nothing  to  say  but 
to  express  his  doubt  as  to  the  probability  of  ever  recouping  the  tempo- 
rary loss.  Yet  it  is  evident  that  to  leave  the  matter  to  a  judgment  of 
probability  is  to  concede  the  possibility  that  a  protective  policy  may 
in  some  cases  be  economically  justifiable;  and  it  is  evident  also  that 
Smith's  policy  involves  the  stereotyping  of  existing  conditions. " 

The  New  Protection  thus  suggests:  first,  that  Adam  Smith,  in  express- 
ing his  doubt  of  the  economic  advantage  of  a  specific  protective  policy 
conceded  the  possible  advantage  of  a  general  protective  policy,  in  some 
cases;  second,  that  Smith's  policy  involves  the  "  stereotyping  of  existing 
conditions."  It  is  not  easy  to  follow  the  New  Protection  at  this  point 
for  the  reason  that  if  Smith's  policy  concedes  the  economic  advantage  of 
protective  taxation  in  "some  cases, "  it  is  not  clear  in  what  way  it  involves 
the  stereotyping  of  existing  conditions.      Or  if  it  involves  the  latter 

'  Ibid,  p.  200. 

»  The  Tariff  Problem,  p.  26. 


Bk.  II  Productive  Potentialities  63 

condition,  how  it  can  concede  the  economic  justification  of  a  protective 
policy  in  some  cases :  the  two  propositions  seem  mutually  exclusive.  Per- 
haps Smith's  own  words  are  the  best  interpretation  of  his  meaning  with 
reference  to  the  acquired  advantages  of  the  New  Protection.  Professor 
Ashley  does  not  cite  the  page  of  Smith's  work  in  which  this  concession 
may  be  found;  he  doubtless,  however,  refers  to  the  following  passage: 
"By  means  of  such  regulation,  indeed,"  says  Smith,  ^  "a  particular  manu- 
facture may  sometimes  be  acquired  sooner  than  it  could  have  been 
otherwise,  and  after  a  certain  time  may  be  made  at  home  as  cheap  or 
cheaper  than  in  the  foreign  country.  But  though  the  industry  of  the 
society  may  be  thus  carried  with  advantage  into  a  particular  channel 
sooner  than  it  could  have  been  otherwise,  it  will  by  no  means  follow  that 
the  sum  total,  either  of  its  industry  or  of  its  revenue,  can  ever  be  aug- 
mented by  such  regulation.  The  industry  of  the  society  can  augment 
only  in  proportion  as  its  capital  augments,  and  its  capital  can  augment 
only  in  proportion  to  what  can  be  gradually  saved  out  of  its  revenue. 
But  the  immediate  effect  of  every  such  regulation  is  to  diminish  its 
revenue,  and  what  diminishes  its  revenue  is  certainly  not  very  likely 
to  augment  its  capital  faster  than  it  would  have  augmented  of  its  own 
accord,  had  both  capital  and  industry  been  left  to  find  out  their 
natural  employments. 

"Though  for  want  of  such  regulations  the  society  should  never  acquire 
the  proposed  manufacture,  it  would  not,  upon  that  account,  necessarily 
be  the  poorer  in  any  one  period  of  its  duration.  In  every  period  of  its 
duration  its  whole  capital  and  industry  might  still  have  been  employed, 
though  upon  different  objects,  in  the  manner  that  was  most  advan- 
tageous at  the  time.  In  every  period  its  revenues  might  have  been  the 
greatest  which  its  capital  could  afford,  and  both  capital  and  revenue 
might  have  been  augmented  with  the  greatest  possible  rapidity. 

"The  natural  advantages  which  one  coimtry  has  over  another  in 
producing  particular  commodities  are  sometimes  so  great  that  it  is 
acknowledged  by  all  the  world  to  be  in  vain  to  struggle  with  them. 
By  means  of  glasses,  hot-beds,  and  hot  walls,  very  good  grapes  can  be 
raised  in  Scotland,  and  very  good  wine,  too,  can  be  made  of  them  at 
about  thirty  times  the  expense  for  which  at  least  equally  good  can  be 
brought  from  foreign  coimtries.  Would  it  be  a  reasonable  law  to  pro- 
hibit the  importation  of  all  foreign  wines,  merely  to  encourage  the  making 
of  claret  and  burgundy  in  Scotland?    But  if  there  would  be  a  manifest 

:  »  The  Wealth  of  Nations.  Bk.  IV.,  ch.  ii.,  p.  30. 


64  The  New  Protection  Pt.  I 

absurdity  in  turning  toward  any  employment  thirty  times  more  of  the 
capital  and  industry  of  the  country  than  would  be  necessary  to  purchase 
from  foreign  countries  an  equal  quantity  of  the  commodities  wanted, 
there  must  be  an  absurdity,  though  not  altogether  so  glaring,  yet  exactly 
of  the  same  kind,  in  turning  toward  any  such  employment  a  thirtieth, 
or  even  a  three-hundredth  part  more  of  either.  Whether  the  advantages 
which  one  country  has  over  another  be  natural  or  acquired,  is  in  this 
respect  of  no  consequence.  As  long  as  one  country  has  those  advantages 
and  the  other  wants  them,  it  will  always  be  more  advantageous  for  the 
latter  rather  to  buy  of  the  former  than  to  make.  It  is  an  acquired 
advantage  only  which  one  artificer  has  over  his  neighbour  who  exercises 
another  trade;  and  yet  they  both  find  it  more  advantageous  to  buy  of 
one  another  than  to  make  what  does  not  belong  to  their  particular 
trades." 

To  read  the  "stereotyping  of  existing  conditions"  into  this  passage, 
or,  in  other  words,  the  clearly  expressed  and  clearly  supported  opinion 
that  natural  industries  are  invariably  of  greater  value  to  a  nation  than 
taxed  industries,  is  not  difficult;  yet,  at  the  same  time,  to  discover  con- 
cessions with  reference  to  the  "possibility  that  a  protective  policy  may 
in  some  cases  be  economically  justifiable"  is  not  so  easy. 

The  "infant  industries,"  "productive  powers  and  potentialities," 
"  educational  tariffs, "  and  so  forth,  have  nothing  but  the  import  duty 
in  common  with  Protection;  they  may  even  be  supported  by  men  opposed 
to  protective  measures,  as  the  following  passage  shows: 

Says  Roscher,^  "All  rational  education  keeps  in  view  as  its  object,  the 
subsequent  independence  of  the  pupil.  If  it  desired  to  continue  its 
guardianship,  the  payment  of  fees,  etc.,  until  an  advanced  age, 
it  would  thereby  demonstrate  either  the  pupil's  want  of  capacity,  or  the 
absurdity  of  its  methods.  The  industrial  protective  system  also  can 
be  justified  as  an  educational  measure  only  on  the  assumption  that  it 
may  be  gradually  dispensed  with;  that  is,  that,  by  its  means,  there  may 
be  a  prospect  of  attaining  the  freedom  of  trade.  In  the  case  of  all  highly 
civilized  nations,  the  presumption  is  in  favor  of  freedom  of  trade,  both 
at  home  and  abroad,  and  in  such  nations  the  desire  for  a  protective 
system  must  be  looked  upon  as  a  symptom  of  disease. " 

Thiers^  said  in  the  Chamber  of  Deputies,  in  1834:  "Used  as  a  retalia- 
tory measure,  the  tariff  is  fatal;  as  a  favour,  it  is  an  abuse;  as  an  en- 

•  Political  Economy,  Vol.  II.,  p.  442. 
'  Ibid.,  p.  446. 


Bk.  II  Productive  Potentialities  65 

couragement  of  an  exotic  industry,  which  cannot  be  naturalized,  it  is 
impotent  and  useless.  Used  to  protect  an  industry,  which  may  succeed, 
it  is  good;  but  it  is  good  only  temporarily;  it  should  end  when  the  educa- 
tion of  the  industry  is  complete,  when  it  is  grown  up. " 

"List^  considers  universal  freedom  of  trade  not  only  as  the  ideal,  but 
also  as  the  object  which  is  to  be  striven  for  by  temporary  limitations  on 
trade. " 

Two  tendencies  may  be  observed  in  the  New  Protection.  The  first  is 
to  repeat  the  arguments  of  the  older  school  in  more  general  terms,  or 
with  reference  to  industrial  education.  Reasons  have  been  presented 
for  believing  that  the  import  duty  is  disadvantageous  with  reference  to 
the  "infant  industry"  of  the  Old  Protection.  If  the  issue  is  shifted  to 
"educational"  grounds,  it  seems  that  the  best  method  of  educating 
industry  is  by  means  of  a  fixed  bounty  for  a  limited  time,  in  order  to  learn 
the  cost  of  the  process,  and  the  use  of  the  education;  both  of  which  are 
impossible  where  an  import  duty  is  tolerated.  Hamilton, ^  the  ablest  of 
American  protectionists,  has  been  cited  with  reference  to  bounties  in 
this  connexion.  In  Germany,  Rau,^  is  quoted  as  preferring  "to  toler- 
ate state  premiums  (politically  so  dangerous),  rather  than  protective 
duties,  because,  in  the  case  of  the  former,  the  magnitude  of  the  as- 
sumed sacrifice  may  be  exactly  estimated  in  advance." 

The  second  tendency  of  the  New  Protection  is  to  quote  Smith  and 
Mill  in  such  a  way  that  the  passages  cited  seem  to  refute  the  body 
of  the  works  of  these  two  really  careful  thinkers.  Reference  to  the 
original  passages  is  the  best  comment  upon  this  phase  of  the  New 
Protection. 


»  Ibid. 

»  Cf.,  p.   2S. 

•  Lehrbuck,  II.,  §214.  cf.     Roscher,  Political  Economy,  Vol.  II.,  p.  450. 


CHAPTER   ni 


THE    ATTRACTION    OF    CAPITAL 


Section  I  —  Capital  Attracted  by  Taxation.    Section  II  —  Effects  of 

Taxation  on  Capital. 


Section  I  —  Capital  Attracted  by  Taxation 

THE  attitude  of  recognized  political  economy  toward  the 
relation  of  protective  taxation  to  capital  is  that  the  tax 
is  impotent  so  far  as  the  creation  of  capital  is  concerned, 
taxation  simply  diverting  existing  capital  from  natural  into 
artificial  channels.  The  Old  Protection,  with  its  "created"  demand 
for  labour,  implies  the  creation  of  capital  by  taxation.  The  New 
Protection  ignores  this  attitude  of  the  popular  policy,  and  may  recognize 
the  impossibility  of  either  creating  a  demand  for  labour,  or  miracu- 
lously bringing  capital  into  existence  by  the  simple  process  of  imposing 
import  duties;  yet  the  imposition  of  the  duty  in  relation  to  capital  is 
supported  on  other  groimds. 

The  mobility  of  capital  is  no  longer  governed,  it  may  be  said,  by 
the  economic  conditions  of  the  eighteenth  or  early  nineteenth  century; 
the  facilities  at  present  offered  to  profit-seeking  tendencies,  together 
with  the  modem  use  of  machinery,  having  revolutionized  productive 
and  distributive  methods  easily  within  the  memory  of  living  man. 
These  two  influences,  working  together,  lead  to  a  transferability  and 
mobility  of  capital  of  which  Adam  Smith  could  not  have  conceived, 
and  which  has  grown  with  increasing  rapidity  since  the  days  of  Mill, 
with  the  result  that  large  interests  in  old  countries  are  found  devoted 
to  the  establishment  of  industrial  enterprise  in  newer  communities. 
Capital  may  thus  take  wing,  as  it  were,  and  transfer  its  beneficent 
influence  from  a  free  trade  or  low  tariff  area  to  a  more  highly  protected 
society,  in  order  to  enjoy  freedom  from  competition  and  larger  profits. 
It  is  evident  that  where  greater  facilities  for  employment  of  capital 
are  offered,  or  where  greater  profits  are  derived,  a  greater  power  of 
attracting  capital   exists.    This  power  of  attraction,   too,  owing  to 

66 


Bk.  II  The  Attraction  of  Capital  67 

modern  methods  of  transportation  and  communication,  may  have 
results  which  the  earlier  economists  could  not  have  contemplated  with 
reference  to  the  movement  of  capital  from  one  country  to  another. 
It  thus  becomes  of  importance,  in  the  development  of  the  industrial 
life  of  the  modern  society,  to  offer  every  inducement  to  capital,  not 
only  in  order  to  retain  that  existing  in  the  coimtry,  but,  if  possible, 
to  invite  its  importation  and  investment  from  abroad.  Hence  arises 
another  function  of  the  import  duty  —  the  attraction  or  retention  of 
capital  through  the  establishment  of  conditions  favourable  to  its  em- 
ployment. 

The  considerations  in  favour  of  this  phase  of  the  new  protective 
policy  cannot  be  more  clearly  or  thoughtfully  presented  than  in  the 
following  passage  from  Professor  Ashley:^  "The  diffusion  of  manu- 
fiicturing  industry  over  the  world  has  been  greatly  assisted  in  the  past, 
and  is  likely  to  be  assisted  far  more  in  the  future,  by  two  sets  of  forces 
which  deserve  more  attention  than  they  have  as  yet  received.  The 
first  is  the  profit-seeking  tendency  of  capital,  which  pursues  an  immediate 
gain  without  any  regard  to  the  ultimate  effect  on  national  prosperity. 
In  several  different  ways  has  the  business  enterprise  of  England  —  in 
a  less  degree  and  more  recently  that  of  other  manufacturing  countries 
also  —  assisted  the  foreign  customers  to  dispense  with  foreign  imports. 
This  assistance  at  first  took  the  form  of  the  exportation  of  machinery 
for  the  manufacture  of  the  same  sort  of  goods,  and  this  process  is  still 
going  on.  With  the  machinery  has  frequently  been  exported  the  skill 
necessary  to  manage  it  at  first  and  to  instruct  the  foreigner  in  its  use.^ 
The  significance  of  this  educational  service  to  backward  countries 
has  been  pointed  out  by  two  observers,  who  —  poles  asimder  as  they 
are  in  their  social  attitude  —  resemble  one  another  in  their  large  ac- 
quaintance with  economic  fact  and  in  their  freedom  from  conventional 
judgments.  'Japan  and  China,'  says  Mr.  Carnegie,  'are  building 
factories  of  the  latest  and  most  approved  character,  always  with  British 
machinery  and  generally  imder  British  direction.  The  jute  and  cotton 
mills  of  India  are  numerous  and  increasing.  It  is  stated  that  one 
British  manufacturing  concern  sends  abroad  the  complete  machinery 
for  anew  mill  every  week.'^  'English  and  German  capitalists,  English 
engineers  and  firemen,'  says  Prince  Krapotkin,  'have  planted  within 

'  The  Tarif  Problem,  p.  75. 

'  In  one  case,  that  of  Park,  Brother  &  Co.,  ot  Pittsburg,  in  1862,  "several  hundred  English  workmen 
were  imported  to  insure  success." 
'  Empire  of  Business,  p,  317. 


68  The  New  Protection  Pt.  I 

Russia  the  improved  cotton  manufactures  of  their  mother  countries; 
they  are  busy  now  in  improving  the  woollen  industries  and  the  pro- 
duction of  machinery;  while  Belgians  are  rapidly  improving  the  iron 
trades  in  South  Russia.'^  And,  as  the  last-named  observer  points 
out,  the  new  producers  start  with  advantages  in  the  possession  of  the 
latest  and  best  machinery,  which  only  the  most  up-to-date  plants  in 
the  older  manufacturing  countries  possess. 

"In  proportion  as  the  wave  of  industrial  production  penetrates  into 
younger  countries,  it  implants  there  all  the  improvements  due  to  a 
century  of  mechanical  and  chemical  inventions;  it  borrows  from  science 
all  the  help  that  science  can  give  to  industry.  The  new  manufactures 
of  Germany  began  where  Manchester  arrived  after  a  century  of  experi- 
ments and  gropings;  and  Russia  begins  where  Manchester  and  Saxony 
have  now  reached. 

"Equally  important  with  the  exportation  of  machinery  and  skill 
has  been  the  investment  of  capital  abroad;  and  it  is  this  which  has 
been  most  noteworthy  in  recent  years.  There  has  long  been  a  good 
deal  of  investment  of  British  capital  in  foreign  works  —  thus  the  de- 
velopment of  the  railway  system  of  the  United  States,  which  has  done 
so  much  to  stimulate  manufactures  in  that  country  and  in  particular 
has  reacted  upon  the  British  agricultural  interests  by  the  cheapening 
of  the  transportation  of  grain,  has  been  to  a  considerable  degree  en- 
couraged by  British  capital.  But  in  more  recent  years,  with  the  heighten- 
ing of  the  tariff  walls  of  other  countries,  there  has  been  a  movement  of 
capital  of  a  still  more  ominous  kind  —  viz.,  the  establishment  by  Eng- 
lish manufacturers  of  factories  within  the  protected  areas.  Anyone 
who  is  acquainted  with  an  English  staple  industry  can  at  once  furnish 
the  names  of  several  firms  which  have  adopted  this  policy.  I  under- 
stand that  this  is  the  case,  for  instance,  in  the  woollen  industries,  with 
the  firms  of  J.  F.  Firth  &  Sons  of  Heckmondwike  (carpet  making), 
and  Sir  Titus  Salt,  Bart.,  Sons  &  Co.,  Limited,  of  Saltaire  (dress  goods, 
&c.),  in  the  United  States;  of  Isaac  Holden  &  Sons,  Limited,  of  Bradford 
(wool  combing),  in  France;  and  of  W.  and  J.  Whitehead,  of  Bradford 
(worsted  spinning),  in  Spain.  In  the  cotton  industry  the  Fine  Cotton 
Spinners'  Association  have  two  or  three  mills  in  France;  and  Coats' 
is  said  to  have  a  thread  mill  in  Russia.  In  order  to  benefit  by  the  fact 
that  the  German  duty  on  yarn  is  considerably  lower  than  that  on 
thread,  a  Belfast  linen  firm  has  established  thread  works  in  Germany, 

'  Fields,  Factories,  and  Workshops,  p.  lo. 


Bk.  II  The  Attraction  of  Capital  69 

where  it  twists,  bleaches,  dyes,  and  finishes  the  yarn  which  it  imports. 
In  the  metal  and  machinery  trades  the  names  occur  to  one  of  J.  J. 
Savile  &  Co.,  of  Sheffield  (steel),  with  their  works  in  Russia,  and  of 
Messrs.  Weir,  of  Glasgow  (ships'  pumps),  with  their  works  in  Germany." 
.  .  .  "The  second  influence  which  ought  to  be  noticed  is  the  increasing 
use  of  more  or  less  automatic  machinery.  The  staple  export  industries 
of  Great  Britain  used  to  call  for  large  quantities  of  fairly  skilled  labour. 
In  several  of  the  great  industries  of  to-day  the  tendency  seems  to  be  to 
replace  this  fairly  skilled  labour  by,  on  the  one  side,  a  relatively  small 
quantity  of  more  highly  intelligent  labour  in  places  of  some  respon- 
sibility, and,  on  the  other  side,  a  larger  force  of  labour  of  a  much  lower 
grade  of  skill.  It  looks  as  if  these  manufactures  in  the  future,  instead 
of  a  great  deal  of  quality  B,  will  want  a  little  of  quality  A,  and  the  rest 
of  quality  C.  Here  we  may  listen  again  to  Mr.  Carnegie.  ^  We  may 
not  agree  with  his  political  ideals;  but  we  can  recognise  in  him  a  man  of 
the  keenest  insight  into  the  methods  of  modern  production: 

"  'The  mechanical  skill  of  old  is  not  generally  required,  but,  where 
necessary  for  a  few  positions  in  each  huge  factory,  is  readily  obtained 
from  the  older  manufacturing  lands.  Automatic  machinery  is  to  be 
credited  as  the  most  potent  factor  in  rendering  non-essential  to  suc- 
cessful manufacturing  a  mass  of  educated  mechanical  labour,  such  as 
that  of  Britain  or  America;  and  thus  making  it  possible  to  create  manu- 
facturing centres  in  lands  which,  until  recent  years,  seemed  destined 
to  remain  only  producers  of  raw  material.'  " 

If  these  passages  are  studied  in  relation  to  the  "  infant  industry," 
a  refutation  of  that  position  may  be  found  in  the  protectionist's  own 
words.     The  "infant  industry"  invites  a  society  to  tax  itself  in  order 
to  educate  its  productive  potentialites.     It  is  clear  that  such  education 
can  have  no  meaning  other  than  development  of  machinery  and  skilled 
labour.     But,  says  the  "attraction  of  capital"  argument,  no  such  educa- 
tion is  necessary,  modern  conditions  making  it  possible  for  the  newest' 
and  most  backward  countries  to  import  skill  and  machinery  without 
any  trouble.    The  New  Protection  here  presents  also  the  exact  reverse: 
of  the  "pauper  labour"  argument.     Low  wage  countries  attract  capital 
from  high  wage  countries,  says  the  New  Protection;  why,  then,  should, 
a  country  tax  itself  in  order  to  raise  wages  which  must  repel  its  own  and 
foreign  capital  toward  low  wage  areas?  I 

This  position,  however,  presents  the  import  duty  upon  wider  grounds  1 

'  Empire  of  Butinas,  p.  319. 


70  The  New  Protection  Pt.  I 

than  any  advanced  by  the  older  school.  It  may  be  pointed  out  that 
organized  industry  and  assured  profits  within  any  thoroughly  protected 
area  to-day  possess  a  power  to  attract  and  absorb  capital  from  other 
countries  to  which  earlier  conditions  present  no  parallel. 

"And  it  should  be  observed,"  says  Professor  Ashley, ^  "that  they 
furnish  the  protectionist  with  some  additional  theoretic  arguments  which 
are  well  worth  weighing.  Adam  Smith  argued  that  protection  could  only 
divert  capital  from  one  industry  to  another;  the  protectionist  can  reply 
that  in  many  instances  it  has  attracted  fresh  capital  into  the  country. 
Adam  Smith,  again,  relying  on  the  transferability  of  capital,  expected 
that  the  lessening  of  prosperity  in  one  particular  home  industry  owing 
to  foreign  competition  would  result  in  the  transference  of  capital  to 
another  home  industry.  But,  as  we  have  seen,  it  may  lead  to  the  trans- 
ference of  capital  to  the  same  industry  in  another  country." 

Capital  attracted  from  other  countries  exists  where  no  capital  existed 
before;  it  brings  its  stimulating  influence  to  bear  upon  industrial  life, 
where  no  such  stimulus  may  be  regarded  as  otherwise  possible.  Where 
capital  moves  in  this  way,  industry  is  actually  encouraged,  and  a  demand 
for  labour  created  within  the  protected  area.  This  encouragement 
and  creation  do  not  seem  valid  as  advanced  by  the  conventional  Pro- 
tection; they  do  apply,  however,  as  understood  by  the  newer  school 
and  must,  therefore,  be  accepted  and  discussed  upon  other  grounds. 

Whether  the  attraction  of  capital  is  advantageous  or  not  need  not 
detain  the  attention;  this  position  is  analogous  to  the  assumption  of  the 
orthodox  Protection  that  industry  should  be  encouraged.  That 
productive  industry  should  be  encouraged  may  be  admitted.  In  the 
previous  discussion  of  the  subject,  the  question  resolved  itself  into  what 
was  the  best  and  least  expensive  method  of  encouragement,  and  this 
seemed  to  be  the  removal  of  checks  and  restrictions  upon  its  development. 
Here,  again,  is  met  the  question,  not  whether  capital  should  be  attracted, 
but  what  is  the  best  method  of  attraction;  for  it  is  obvious  that  cap- 
ital may  be  attracted  from  one  country  to  another  by  means  other 
than  the  taxation  of  the  vital  and  industrial  needs  of  its  population. 

The  advantages  or  disadvantages  of  different  methods  of  stimulating 
the  industrial  life  of  a  society  are  not  at  first  sight  apparent  in  their 
relative  degree  of  importance.  When  it  is  said  that  a  nation  gains 
more  through  increasing  its  capital,  by  means  of  taxation,  than  it 
loses  in  higher  prices  and  artificial  conditions,  the  relation  of  the  two 

*  Thf  TariJ  Problem,  p,  78. 


Bk.  II  The  Attraction  of  Capital  71 

sides  of  the  question  is  not  at  once  clear.  The  capital  gained  is  a  de- 
finite fact,  measurable  in  figures;  the  higher  prices  may  be  offset  against 
the  capital,  but  then  occurs  the  consideration  of  the  stimulus  the  im- 
ported capital  has  given  to  the  productive  powers  of  the  nation  with 
its  important,  but  intangible,  advantages.  The  discussion  of  the  sub- 
ject usually  ends  in  the  expression  of  divergent  opinion,  owing  to  the 
difficulty  of  exact  presentation  of  the  relative  cost  and  advantage  gained. 

It  may  not  seem  impossible,  however,  to  compute  in  pounds,  shillings, 
and  pence  the  relative  cost  and  gain  of  two  different  methods  of  at- 
tracting capital ;  one,  by  means  of  the  taxation  of  imports,  which  might 
be  called  the  indirect  method;  and  another,  which  might  be  called  the 
direct  method.  The  New  Protection  invites  a  nation  to  tax  itself  in 
such  a  way  that  it  must  pay  artificial  profits  to  capital,  in  order  that 
home  capital  may  remain  within  its  boundaries,  and  that  foreign  cap- 
ital be  tempted  to  seek  investment  in  the  development  of  its  industry. 
The  New  Protection  thus  taxes  imports,  puts  up  prices,  and  involves 
aU  the  expense  and  every  form  of  Protection,  in  order  to  pay  exaggerated 
profits  to  capital.  But  it  seems  evident  that  any  nation  can  pay 
profits  to  capital  at  any  rate  whatever,  and  attract  all  the  capital  it  can 
profitably  use,  without  taxing  imports,  putting  up  prices  or  involving 
any  of  the  waste  of  Protection. 

Upon  protectionist  principles,  the  advantage  gained  by  a  nation  in 
capital,  attracted  through  import  taxation,  is  evident  —  the  nation 
gains  the  capital.  It  is  also  evident  that  the  more  heavily  the  nation  is 
taxed,  or  the  greater  the  profits  offered,  the  greater  will  be  its  powers 
of  attraction;  in  other  words,  that  the  import  duty  is  only  effective 
in  attracting  capital  in  proportion  to  the  amount  of  taxes,  in  the  form 
of  profits,  which  it  hands  over  to  protected  capital.  The  question 
thus  resolves  itself  into  the  comparison  of  two  methods  of  taxation, 
either  of  which  may  attract  a  given  amount  of  capital. 

The  New  Protection  taxes  a  nation  in  order  to  attract  capital  through 
abnormal  profits;  that  is,  through  a  higher  rate  of  interest  than  the 
market  rate  for  money.  The  average  interest  rate  of  a  nation's  se- 
curities is  the  standard  by  means  of  which  other  methods  of  attracting 
capital  may  be  measured. 

It  may  be  supposed  that  the  difference  between  the  two  is  $  per 
cent;  in  other  words,  that  a  nation  can  borrow  money  at  3  per  cent 
and  that  the  average  profits  of  capital  attracted  by  Protection  is  8 
per   cent.    The   actual   percentages   are   unimportant,    the   essential 


72  The  New  Protection  Pt.  I 

feature  being  that  the  rate  of  profit  guaranteed  on  capital,  attracted  by 
means  of  import  duties,  must  be  greater  than  the  average  rate  for  money; 
otherwise  no  capital  would  be  attracted  by  the  protected  industries. 

It  may  now  be  supposed  that  a  certain  amount  of  foreign  capital  is 
bodily  attracted  from  abroad  by  the  import  duty  and  invested  in  pro- 
tected industry.  Upon  this  assumption,  every  year  a  certain  percentage 
of  the  total  capital  must  be  sent  abroad  in  profits  and,  if  these  are 
at  about  the  rate  of  8  per  cent,  at  the  end  of  twelve  or  thirteen  years 
the  foreigner  has  received  his  entire  capital  back  again  from  the 
protected  country.  The  taxing  country  seems,  therefore,  after  such 
a  period,  which  may  be  longer  or  shorter  in  proportion  to  taxed 
profits,  no  better  off  than  before,  and  its  capacity  for  employing  labour 
no  greater  than  at  first.  At  the  end  of  twenty-five  or  thirty  years 
the  protected  nation  has  sent  the  entire  amount  of  the  original  capital 
out  of  the  country,  together  with  an  added  quantity  equal  to  it,  and 
continues  the  process  indefinitely. 

These  seem  to  be  the  results  of  adopting  the  protective,  or  indirect, 
method  of  attracting  foreign  capital.  If  the  taxation  imposed  does  not 
attract  any  capital,  but  is  continued  merely  in  order  to  prevent  home 
capital  from  seeking  foregin  outlets,  the  nation  is  taxing  itself  in  order 
to  pay  usurious  interest  on  capital  for  which  it  has  no  legitimate  use; 
and,  at  the  same  time,  losing  the  real  increase  in  its  capital  which  might 
be  obtained  in  its  more  productive  use  abroad  through  the  return  of 
profits. 

Another  method  of  attracting  capital  may  now  be  examined.  If  the 
nation  borrows  the  capital  abroad  at  3  per  cent,  it  could  be  used  in  the 
encouragement  of  any  industry  as  long  as  desirable.  At  the  same  cost 
to  the  nation  as  the  indirectly  attracted  capital  with  relation  to  this 
industry  alone,  a  sinking  fund  of  5  per  cent  could  be  created,  the  entire 
amount,  principal  and  interest,  paid  off  in  twenty  years,  the  flow  of 
capital  out  of  the  country  stopped,  and  the  industry  owned  at  home  at 
at  the  same  time.  Which,  it  may  be  asked,  is  the  most  advantageous 
method  of  attracting  capital?  To  pay  8  per  cent  indefinitely,  with  the 
loss  of  the  entire  capital  gained  every  ten  or  twenty  years,  or  to  pay  8 
per  cent  for  twenty  years  when  the  capital  remains  at  home? 

Or  again,  it  may  be  asked,  which  is  the  better  policy?  To  pay  3 
per  cent  for  a  definite  amount  of  capital  to  be  used  for  a  definite  purpose 
in  a  definite  way,  as  long  as  desirable  and  then  returned,  or  to  pay  8 
per  cent  indefinitely  on  all  existing  protected  capital,  in  order  to  attract 


Bk.  II  The  Attraction  of  Capital  73 

an  indefinite  amount  of  capital,  to  be  used  indefinitely  for  an  indefinite 
purpose,  without  knowing  in  reality  whether  or  not  any  capital  is  at- 
tracted; for,  it  must  be  remembered,  that  in  order  to  attract  capital  by 
means  of  import  duties  a  nation  must  guarantee  artificial  profits  on  all 
industries  involved,  although  no  capital  is  attracted  during  the  process. 
If  this  is  understood  it  may  appear  that  in  the  foregoing  comparison  the 
cost  of  attracting  capital  by  means  of  import  taxes  is  much  underesti- 
mated; for  the  reason  that  such  methods  involve  the  paying  of  artificial 
profits  upon  the  entire  amount  of  the  capital  invested  in  all  the  protected 
industries  of  the  country,  although  not  one  dollar,  franc,  or  pound 
of  capital  may  be  attracted.  If  any  is  attracted  by  such  methods, 
however,  it  apparently  costs  the  people  many  times,  in  all  likelihood 
many  hundreds  of  times,  its  real  value;  besides  being  constantly  sent 
out  of  the  country  in  profits  and  dividends. 

The  same  considerations  apply  to  the  subject  of  keeping  capital 
in  a  country  by  means  of  protective  taxes.  If  the  capital  requires 
these  taxes  to  keep  it  in  the  country,  the  wisest  course  seems  to  be  to 
wish  it  godspeed,  for  the  nation  could  easily  obtain  the  same  capital 
from  other  sources  at  far  less  expense  than  the  protective  taxes. 

When  foreign  capital  is  attracted  and  incorporated  within  the  do- 
mestic capital,  and  no  profits  sent  abroad,  analogous  conditions  are 
met.  Capital  can  be  attracted  in  this  way  but  by  a  system  of  taxation 
guaranteeing  permanent  profits  on  all  protected  capital,  whether  at- 
tracted or  not.  By  the  issue  of  its  obligations  the  nation  would  have 
the  permanent  use  of  any  given  amount  of  foreign  capital  at  the  nor- 
mal rate,  paid  on  the  amount  actually  attracted  alone,  and  have  the 
possibility  always  present  of  checking  unnecessary  expense;  together 
with  the  advantage  of  knowing  what  it  was  doing,  why  it  was  doing  it, 
and  how  much  it  cost. 

Section  II — Effects  of  Taxation  on  Capital 

The  protective  theory,  that  a  nation  gains  the  total  capital  which 
its  taxes  attract,  is  not  only  questionable,  but  improbable,  for  the 
following  reasons: 

In  the  case  of  a  single  nation,  there  is  reason  to  believe  that  taxation 
of  industrial  products  but  diverts  existing  capital  from  one  form  of 
employment  to  another,  the  protected  capital  moving  from  one  in- 
dustry into  a  less  productive  industry.  International  industry  in 
general  suggests  analogous  conclusions;  namely,  that  the  taxation  of 


74  The  New  Protection  Pt.  I 

industry  diverts  capital  from  one  area  into  a  less  productive  area,  and 
the  tendency  to  attract  implies  a  counteracting  tendency  to  repel.  ^ 
In  other  words,  taxes  attracting  capital  may  repel  or  expel  other  capital. 
The  reasoning  applying  to  a  single  nation  applies  to  industrial  condi- 
tions at  large.  It  seems,  in  fact,  that  the  most  important  movement 
of  capital  must  be  toward  free  trade,  or  freer  trade  areas,  for  the  reason 
that  the  latter,  on  account  of  unrestricted  industry  and  commerce, 
enjoy  a  more  productive  division  of  labour;  and  produce,  in  conse- 
quence, a  relatively  greater  quantity  of  wealth,  with  its  tendency  to 
attract  other  wealth.  England's  maintenance  of  her  position  as  the 
monetary  centre  of  the  world,  without  protective  taxes,  due  doubtless  to 
a  number  of  causes,  lends  no  little  support  to  this  position. 

"England  is  constantly  investing  abroad  and  so  losing  her  capital," 
says  the  New  Protection.  Every  million  England  sends  abroad  at  5 
per  cent  returns  two  millions  in  forty  years  to  English  soil,  and  the 
process  continues  indefinitely.     This  attraction  costs  the  nation  nothing. 

The  capital  attracted  in  this  way,  therefore,  creates  more  wealth 
than  it  displaces.  The  capital  attracted  by  protective  taxation  and 
artificial  profits,  on  the  contrary,  seems  to  displace  more  wealth  than 
it  creates;  were  this  not  so,  the  protective  taxation  would  be  unnecessary. 

1  Cf.  pp.  81.  87. 


CHAPTER   IV 


DUMPING 


Section  I  —  Taxation  for  the  Encouragement  of  Dumping.     Section  II 
—  Taxation  for  the  Prevention  of  Dumping. 


Section  I  — Taxation  for  the  Encouragement  of  Dumping 

THE  recent  changes  in  modern  industrial  conditions,  throughout 
the  entire  iield  of  production  and  distribution,  present  many 
new  considerations  in  support  of  theoretical  Protection  with 
which  the  older  advocates  of  the  school  were  unfamiliar. 
With  different  conditions,  different  problems  arise.  It  may  be  asked 
to-day,  not  whether  more  normal  or  natural  methods  are  best;  but,  as 
abnormal  and  unnatural  conditions  are  everywhere  prevalent,  much 
more  complicated  questions  are  presented  with  reference  to  the  best 
means  of  meeting  these. 

Perhaps  in  few  phases  of  modern  industrial  development  are  the 
changes  so  marked  as  in  those  traceable  to  the  influence  of  great  accumu- 
lations of  fixed  capital.  On  one  side,  capital  is  possessed  of  a  mobility 
unknown  to  the  earlier  economic  thinkers.  On  another,  however,  capital 
establishes  itself  in  enormous  plants  and  industrial  systems,  with  fixed 
charges  so  great,  and,  at  times,  the  possible  margin  between  profit  and 
loss  so  small,  that  the  slightest  checking  of  production  may  cause  im- 
portant loss  to  owner  and  operative  alike.  Again,  the  productive  powers 
of  these  great  undertakings  have  been  increased,  and  are  increasing, 
through  modern  applications  of  steam  and  electricity,  with  great  rapidity. 
These  conditions,  singly  and  together,  give  rise  to  a  definitely  conceived 
industrial  policy  rendered  more  effective  by  modern  methods  of  com- 
munication and  transportation.  This  policy  is  known  to  the  modern 
economist  as  "dumping." 

In  its  later  aspect,  dumping  is  largely  due  to  two  causes:  Protection 
and  organized  capital.  Protection  alone  would  probably  be  powerless 
to  carry  on  a  system  of  industrial  dumping  on  any  important  scale,  for 

75 


76  The  New  Protection  Pt.  I 

home  competition  would  be  a  constant  check  on  prices.  Organized 
capital  would  be  little  more  efifective,  for  it  would  be  compelled  to  meet 
competition  from  abroad,  without  the  assistance  of  taxes  controlling 
domestic  prices.  Combined,  however,  these  two  factors  create  industrial 
systems  often  free  from  competitive  influence  abroad  as  well  as  at  home. 
The  protective  taxes  shut  out  the  foreign  producer.  Organization 
finding  itself  in  control  at  home,  casts  its  eye  upon  foreign  markets;  not 
as  coming  in  competitive  contact  with  the  foreign  producer,  but  as  a 
means  of  disposing  of  surplus  product.  Price  is  of  slight  importance, 
for  decreased  cost  of  production,  increased  output  and  constant  operation 
are  the  dominant  considerations  in  this  policy.  The  organization  of 
capital,  rendered  at  once  easy  and  effective  through  the  influence  of  a 
protective  system,  is  carried  to  its  fullest  development  in  Germany  and 
the  United  States;  the  latter  country  exhibiting,  perhaps,  the  most 
remarkable  achievements  in  this  direction. 

As  in  all  matters  pertaining  to  exchange,  there  are,  in  connexion  with 
dumping,  two  policies  to  be  considered:  the  policy  of  the  dumping  nation 
and  that  of  the  nation  into  which  the  goods  are  dumped.  In  looking 
for  concrete  examples,  the  attention  is  drawn  to  Germany  and  the 
United  States  as  those  most  efiicient  in  dumping,  on  account  of  their 
organized  capital  sheltered  behind  protective  taxation;  and,  on  another 
side,  to  England,  with  her  unprotected  markets,  as  the  nation  most 
exposed  to  their  industrial  attacks.  The  policy  of  the  nation  producing 
the  dumped  goods  will  be  considered  first. 

Dumping  is  of  two  kinds:  one,  a  constant  and  systematic  policy; 
another,  due  to  what  Professor  Ashley  aptly  calls  ''  the  inexorable  needs 
of  fixed  capital."  In  the  first,  the  policy  is  adopted  of  producing  a  con- 
stant output  greater  than  the  home  demand  will  support,  and  disposing 
of  it  abroad;  in  the  second,  a  plant  may,  for  various  reasons,  overstock 
the  home  market  temporarily,  and  dispose  of  its  surplus  from  time  to 
time  in  other  countries  at  any  price  obtainable.  These  two  kinds  of 
dumping  may  be  distinguished  as  constant  and  intermittent.  The 
intermittent  variety  may  be  neglected  in  relation  to  the  producing 
nation;  if  it  becomes  of  industrial  importance  it  will  resemble  the 
constant  kind  and  may  be  grouped  with  it. 

This  industrial  policy  is  of  interest,  both  as  an  offshoot  of  protective 
taxation  and  in  its  effects  upon  the  industrial  and  financial  life  of  a 
nation  supporting  such  a  system.  Its  advantages  have  been  clearly 
and  favourably  expressed  by  a  witness  before  the  Industrial  Commission 


Bk.  II  Dumping  77 

of  the  United  States,  in  1899 r^  "My  idea  is  that  English  and  German 
manufacturers  invariably  make  a  dumping  ground  of  America  when  they 
are  slack  of  work;  they  distribute  their  fixed  charges  over  a  full  tonnage: 
they  get  their  profit  out  of  the  home  trade  and  dump  their  surplus  into 
America.  .  .  .  We  want  to  take  a  leaf  out  of  the  book  of  the  German  and 
the  Englishman,  and  we  want  to  send  stuff  abroad.  .  .  .  The  efifect 
of  the  tariff  in  our  special  line  of  business  is  very  material.  We  ship 
our  products  from  one  end  of  the  United  States  to  another.  We  ship  to 
Maine  and  San  Francisco,  Seattle  and  Galveston.  We  go  from  one 
port  to  another  wath  cotton  ties,  bands,  everything  of  that  kind.  We 
have  a  rate  of  freight  which  is  higher  from  Pittsburgh  to  the  ocean  points 
than  the  Englishman  can  send  the  stuff  for.  He  can  ship  for  four,  six, 
eight  shillings  a  ton  to  Galveston,  Charleston,  or  any  of  these  ports;  and 
our  freight  from  Pittsburgh  is  heavier  by  railroad  than  the  freight  across 
the  water.  Now  if  we  had  not  that  tariff  it  would  mean  that  we  should 
have  to  meet  that  price.  .  .  .  We  can  manufacture  more  cheaply 
than  anywhere  else  in  the  world,  .  .  .  but  we  could  not  reach  all 
over  this  country  and  compete  with  the  foreigner  in  certain  ways  if  we 
had  not  a  tariff. "    Another  witness  is  reported  as  follows: 

"Q.  How  does  the  export  price  compare  with  the  price  to  the 
American  consumers?  A.  We  are  selling  to  the  markets  of  the 
world  at  a  less  price  than  at  home. 

"  Q.  Will  you  kindly  explain  the  business  reasons  for  doing  that? 
A.  The  business  reason  for  doing  that  is  that  by  working  up  a  foreign 
business  we  can  operate  our  mills  more  fully,  we  can  make  our  goods 
cheaper,  and  whenever  the  time  comes  that  there  is  a  decline  of  the 
home  price  it  vnl\  not  necessarily  affect  the  foreign  prices.  There  are 
times  when  the  export  prices  are  higher  than  the  home  prices.  Just 
at  the  present  time  our  home  prices,  I  think,  are  probably  50, 60,  or  70  cents 
a  hundred  higher  than  our  export.  I  do  not  really  know  just  the  difference, 
but  I  know  there  is  a  difference  in  favour  of  export  to-day.  At  times 
it  is  the  other  way.  But  by  manufacturing,  say,  200,000  tons  of  wire 
per  annum  to  export  to  all  parts  of  the  world  we  cheapen  the  entire  cost 
of  manufacture  very  materially.  By  doing  that  we  are  able  to  give  the 
consumer  at  home  a  lower  price  in  the  long  run,  and  employ  perhaps  25 
or  30  per  cent  more  workmen,  so  that  in  the  long  run  we  figure  that  it  will 
equalize  itself.     Our  home  prices  and  our  foreign  prices  are  never  neces- 

'  Report  of  U.  S.  Industrial  Commission,  i.  1015,  cited  by  Professor  Ashley,  The  Tarif  Problem, 
pp.  06-97. 


78  The  New  Protection  Pt.  I 

sarily  on  a  parity;  one  might  be  higher  and  the  other  might  be  lower;  it 
would  depend  entirely  on  circumstances." 

With  this  data,  the  advantages  of  supporting  protected  industries 
which  sell  abroad  for  less  than  at  home  may  be  summarized  as  follows: 
First,  in  developing  a  foreign  demand  the  cost  of  production  is  lessened, 
and  the  home  consumer  benefited  by  a  lowered  price.  Second,  by 
increasing  the  output  of  a  plant,  a  greater  quantity  of  labour  is  employed 
than  would  otherwise  be  possible,  thus  creating  a  demand  for  labour, 
raising  wages  and  so  forth. 

It  will  be  admitted  that  among  the  most  effective  methods  of  lowering 
cost  of  production  is  constant  operation  and  increased  output;  that  dump- 
ing decreases  cost  of  production  is  evident;  that  decreased  cost  of  produc- 
tion permits  lower  home  prices  is  clear;  that  protected  dumping  industries 
are,  in  consequence,  able  to  sell  to  the  home  consumer  at  a  lower  price  than 
would  otherwise  be  possible  is  obvious;  that  they  do  so  at  times  is  probable, 
for  net  gain  may  often  be  increased  in  this  way,  especially  if  the  demand 
begins  to  fall  off:  that  protected  dumping  industries  ever  lower  the  real,  or 
normal  price,  in  the  home  market  is,  however,  neither  clear  nor  obvious. 

It  may  even  appear  evident  that  they  not  only  do  not  do  so,  but  never 
can;  and  that  the  existence  of  the  protected  price,  forced  by  means  of 
taxation,  is  demonstration  of  the  validity  of  such  a  position.  As  one 
of  the  authorities  cited  observes:  "If  we  had  not  that  tariff,  it  would 
mean  that  we  should  have  to  meet  that  price."  It  thus  seems  that 
dumping,  or  the  non-competitive  exploitation  of  foreign  markets,  by 
means  of  a  forced  price  at  home,  is  not  a  very  effective  factor  in  lowering 
prices  in  the  home  market;  that  it  may,  or  may  not,  lower  protected  prices 
is  of  slight  importance,  but  that  it  lowers  normal  prices  seems  a  position 
neither  in  harmony  with  the  facts  nor  with  the  testimony  presented. 

The  Protection  which  lowers  price  has  been  discussed  with  reference  to 
one  of  the  most  important  dumping  industries  in  the  world;  there  seems, 
therefore,  little  advantage  in  developing  the  subject  in  this  direction. 
There  is  reason  to  believe  that  it  has  cost  the  American  people  many 
hundred  of  millions  during  the  past  ten  years  to  lower  prices  in  this  way 
in  a  single  dumping  industry  and  that  the  "lowered"  prices  were  always 
very  much  higher  than  necessary  during  the  entire  process  of  reduction. 
Exhaustive  statistical  demonstration  of  this  position  is  found  in  the 
works  of  Mr.  D.  A.  Wells, ^  and  in  those  of  Mr.  Edward  Atkinson, ^ 

'  Recent  Economic  Changes,  Appendix  p.  467. 

'  Facts  and  Figures  the  Basis  of  Economic  Science,  p.  108  el  seq. 


Bk.  II  Dumping  79 

When  a  nation  is  urged  to  tax  itself  in  order  to  supply  the  foreigner  with 
its  products  at  less  than  the  home  price,  so  that  the  demand  for  labour 
may  be  increased,  wages  raised,  and  so  on,  the  long  familiar  arguments  of 
the  classic  Protection  are  but  repeated  with  reference  to  the  "creation 
of  a  demand  for  labour."  It  may,  of  course,  be  admitted,  by  means  of 
presenting  the  home  producer  with  artificial  profits  in  the  home  market 
while  underselling  abroad  at  the  same  time,  that  a  greater  quantity  of 
labour  may  be  employed  in  such  industry  than  would  otherwise  be 
possible.  In  other  words,  that  a  highly  taxed  and  protected  exporting 
industry  will  absorb  a  greater  amount  of  capital  than  the  same  industry 
untaxed.  This  capital  must  have  existed  in  the  country,  however,  be- 
fore taxes  made  dumping  possible;  that  is,  the  existence  of  the  capital 
implies  that  without  the  taxes  it  would  have  sought  some  other  outlet  in 
more  productive  and  diversified  industry  and,  consequently,  have 
employed  more  labour  without  dumping  than  with  it.  It  seems  here, 
as  in  the  older  Protection,  to  be  simply  a  question  of  the  diversion  and 
congestion  of  capital  and  labour  through  the  control  of  the  fiscal  system 
of  a  country. 

In  the  discussion  of  the  conventional  Protection,  it  was  shown  how 
Cobden  and  the  English  free  traders  of  the  last  century  dwelt  upon  the 
protection  given  to  foreign  manufacturers  by  the  English  Corn  Laws,  and 
instances  were  presented  showing  how  the  taxes  on  raw  materials  in 
America  protected  the  foreign  producer  of  the  finished  article.  The 
taxation  which  permits  the  home  producer  to  control  industry  in  this 
way,  and  at  the  same  time  dump  his  products  abroad,  will  be  much  more 
disadvantageous  to  the  country  permitting  such  conditions,  even  to  the 
extent  of  driving  home  capital  abroad,  in  order  to  profit  by  the  lower 
foreign  price  of  the  home  industry.  The  following  extract  from  the 
report  of  Mr.  F.  Oppenheim,i  British  Consul  General  at  Frankfort- 
on-Main  serves  as  illustration: 

"The  development  of  the  German  export  trade  in  iron  and  iron  goods 
is  especially  noteworthy.  During  the  boom  the  inland  manufacturers 
were  not  able  to  satisfy  the  demands  of  the  home  market  and  at  the 
same  time  maintain  their  position  in  the  world's  market.  Imports  rose 
rapidly  and  exports  receded  in  proportion.  With  the  turn  of  the  tide 
the  exporting  industries  again  became  anxious  to  export,  the  inland  con- 
sumption having  proved  insufficient.    The  figures  for  German  trade 


'  Quoted  from  Mr.  Hugh  Bell's  Analysis  of  Protection  and  the  Steel  Trade,  The  Independent  Revieu^ 
October,  iqo3,  p.  62  ebseq. 


8o  The  New  Protection  Pt.  I 

abroad  clearly  illustrate  this.  Imports  receded  step  by  step  as  the  home 
market  no  longer  needed  them.  It  is  very  remarkable,  however,  how 
quickly  the  German  manufacturers  succeeded  in  regaining  their  former 
position  in  the  world's  market,  which  they  had  abandoned  of  their  own 
free  will.  They  were  assisted  (it  is  true)  by  favourable  circumstances, 
more  especially  by  heavy  demands  from  the  United  States.  Important 
articles  of  German  manufacture  went  to  the  United  States  in  considerable 
quantities. 

"The  syndicates,  too,  came  to  the  rescue  of  the  iron  industry;  under 
cover  of j  the  protectionist  duties,  the  syndicates  were  enabled  to  keep  up 
prices  at  home  in  spite  of  the  limited  demand,  whereby  the  several  works 
were  placed  in  a  position  to  reduce  their  prices  in  the  world's  market  and 
were  enabled  more  easily  to  compete.  The  dijGference  of  prices,  however, 
fixed  by  the  same  works  for  sales  at  home  and  sales  abroad  became  so 
great  that  it  produced  strong  comments  even  in  the  Diet.  Among  all 
the  syndicates  those  controlling  raw  material  and  half-finished  goods 
proved  themselves  the  most  powerful  and  the  hardest  masters.  They 
sold  raw  material  and  half  finished  goods  abroad  at  low  prices,  so  that 
the  home  industries  which  worked  off  such  raw  materials,  etc.,  were 
severely  handicapped.  These  asserted  (and  not  without  reason)  that 
the  consumers  of  German  raw  material  in  foreign  countries,  especially 
in  Holland  and  Belgium,  were,  by  these  prices,  placed  in  such  an  ad- 
vantageous position  that  it  was  most  difficult,  if  at  all  possible,  to  com- 
pete against  their  prices.  The  syndicates  themselves  admitted  the 
seriousness  of  the  position  by  expressing  their  willingness  to  grant 
certain  export  bonuses,  which,  however,  the  industries  concerned 
pronounced  inadequate.  Some  cases  actually  transpired  in  which 
German  "finishing"  manufacturers  had  to  decline  orders  owing  to  the 
exorbitant  prices  of  raw  material,  which  orders  subsequently  passed  to 
Holland,  Belgium  and  the  United  Kingdom. "     (pp.  7,  8.) 

.  .  .  "Thus  this  German  material  is  to  be  had  much  cheaper 
abroad  than  it  can  be  had  at  home,  yet  the  home  customer  makes  from 
such  German  material  (half-finished  goods)  finished  goods,  for  the  sale 
of  which  he  will  greatly  have  to  rely  upon  export.  On  the  world's 
market  the  merchandise  of  this  German  manufacturer  will  have  to  com- 
pete against  foreign  merchandise,  also  made  from  German  material 
(half- finished  goods),  and  as  this  material  was  purchased  at  a  greatly 
reduced  cost,  the  foreign  manufacturer  can  sell  his  goods  considerably 
cheaper  than  the  German.    Thus  it  follows  that  the  German  export  of 


Bk.  II  Dumping  8i 

half-finished  goods  is  rapidly  driven  up,  while  the  export  of  finished 
goods  recedes  —  a  state  of  affairs  altogether  contrary  to  the  best  eco- 
nomic interests  of  the  country,  as  it  is  most  beneficial  to  the  country  at 
large  that  the  exported  goods  should  contain  and  represent  as  much  na- 
tional labour  as  possible.  The  export  of  machines,  e.g.,  benefits  national 
labour  more  than  the  export  of  iron  bars,  yet  iron  bars,  while  they  cost 
home  consumers  95  marks  delivered  at  the  Rheinish-Westphalian  works, 
were  exported  during  the  month  of  September  for  80  marks,  or  even  72 
marks,  f.  o.  b.  It  is  said  that  the  British  and  Belgium  rolling  mills  cal- 
culated their  prices  for  rolled  wire  upon  the  basis  of  these  cheap  purchases 
in  Germany,  so  that  the  price  fell  very  considerably  on  the  world's  market, 
and  the  German  wire  industries,  which  export  nearly  60  per  cent,  of  their 
produce,  were  forced  to  make  allowance  for  their  considerably  reduced 
price."  .  .  .  *'A  very  glaring  case  to  the  point  was  reported  in 
Diisseldorf.  A  factory  using  tin  for  its  raw  material  continued  for  many 
years  a  profitable  trade  with  Holland  in  tinned  goods,  buckets,  etc. 
In  consequence  of  the  cheap  export  price  of  tin,  the  identical  goods  are 
now  manufactured  in  Amsterdam  very  probably  from  German  material, 
so  that  the  manufacturer  was  left  with  a  stock  of  about  100,000  pails,  for 
which  he  could  find  no  customers.  Another  firm  (in  Dortmund)  has 
decided  to  transfer  a  considerable  part  of  its  establishment  to  Holland, 
as  it  can  there  obtain  the  necessary  German  raw  material  so  much  more 
cheaply  than  in  Germany. "  (pp.  27-28.) 

It  is  evidently  to  the  best  interests  of  a  country  to  represent  in  its 
exports  the  greatest  amount  of  domestic  labour;  to  export  the  most 
highly  finished  goods.  The  taxation  of  raw  material  on  one  hand, 
and  dumping  abroad  on  another,  will  apparently  check  this  most  produc- 
tive and  diversified  employment  of  labour  and  concentrate  it  within  fewer 
and  less  varied  channels  of  less  productive  industry.  It  thus  seems  that 
protected  dumping  not  only  narrows  the  demand  for  labour,  by  con- 
gesting it  in  fewer  channels,  but  may  drive  capital  abroad  and  check  the 
possible  demand  for  labour  at  the  same  time. 

Other  considerations  may  be  presented  in  this  connexion.  It  may 
readily  be  shown  how  the  abnormal  and  unstable  growth  of  protected 
exporting  organizations  must  sink  deep  into  the  industrial  and  financial 
life  of  a  nation,  through  channels  other  than  those  of  the  direct  employ- 
ment of  capital  and  labour.  The  United  States  presents  the  most  in- 
structive illustration  of  this  phase  of  the  New  Protection: 

When  a  great  industrial  combination  is  focused  under  a  system  of  taxes, 


82  The  New  Protection  Pt.  I 

rates  and  forced  prices,  such  as  those  at  present  in  vogue  in  America, 
an  enormous  earning  power  is  placed  under  the  control  of  its  organizers. 
These  men  are  not  unnaturally  tempted  to  capitalize  and  sell  this  earning 
power  at  its  full  capacity.  When  such  an  organization  is  formed,  with 
earnings  largely  dependent  upon  a  network  of  taxes,  its  securities  are 
sold  to  the  people  or  disposed  of  through  the  fiduciary  institutions,  if 
the  people  refuse  to  buy  them  in  the  open  market.  If  the  industries  are 
over-capitalized,  as  is  generally  the  case,  the  securities  will  begin  to  fall 
in  value,  with  the  result  that  they  may  be  repurchased  by  the  original 
organizers  and  reinflated  in  a  thousand  ways,  through  readjustments  in 
direct  and  indirect  taxes,  new  transportation  rates  and  agreements, 
exaggerated  statements,  declarations  of  unearned  or  guaranteed  divi- 
dends, and  so  on.  This  process,  it  is  obvious,  is  entirely  in  control  of  the 
organizers  and  the  men  who  fix  the  taxes  and  the  rates;  it  may  be  con- 
tinued indefinitely  and  is  independent  of  the  relation  of  original  capitali- 
zation to  original  earning  powers.  The  facts  seem  to  show  that  the  popu- 
lation which  taxes  itself  in  order  to  dump  goods  abroad,  sells  its  goods  to 
the  foreigner  for  less  than  it  must  pay  itself,  congests  and  stifles  a  large 
part  of  its  own  industry,  and  creates  an  irresponsible  system  of  stock 
manipulation  at  the  same  time. 

This  phase  of  the  New  Protection  may  be  studied  at  length  in  financial 
investigations  of  the  United  States.  The  connexion  between  legislative 
interference  with  economic  conditions,  by  means  of  protective  fiscal 
enactments,  and  the  whole  financial  and  industrial  system  of  a  people, 
is  not  only  direct  and  intimate,  but  no  such  legislation  can  exist  without 
involving  the  national  financial  existence.  The  bank,  the  insurance 
company,  and  organizations  of  trust  in  general,  find  themselves  not  only 
in  possession  of  funds  seeking  investment,  but,  at  the  same  time,  in 
possession  of  funds  which  may  be  used  to  influence  legislative  decisions 
affecting  such  investments;  and  for  what,  it  may  be  asked,  does  protec- 
tive legislation  exist,  if  not  to  develop  the  resources  of  the  country, 
encourage  industry,  create  a  demand  for  labour,  and  raise  wages?  In 
other  words,  to  adopt  fiscal  enactments  at  the  dictation  of  organized 
capital. 

The  financial  resources  of  the  people,  in  the  course  of  saving  and 
industry,  drift  toward  the  banking,  the  insurance,  and  the  fiduciary 
institutions  of  the  country.  Great  resources  are  thus  placed  at  the 
disposition  of  those  in  control  of  these  organizations,  and  great  resources 
have  always  been,  and  in  all  likelihood  always  will  be,  in  some  form  or 


Bk.  II  Dumping  83 

other,  the  chief  factors  in  legislative  decisions.  Where  these  resources 
find  opportunity  for  affecting  values  by  means  of  fiscal  decisions 
the  result  is  obvious.  The  presidents  or  directors  of  a  bank  or  insurance 
company  may  be  largely  interested  in  protected  or  dumping  industries; 
it  is,  in  fact,  impossible  for  them  not  to  be  interested  in  such  industries, 
for,  although  they  may  not  own  or  hold  a  single  share  of  their  issues, 
these  issues  will  enter  into  the  credit  system  of  the  country  and  so  affect 
all  institutions  fundamentally.  The  value  of  such  protected  securities, 
again,  is  dependent  upon  the  decisions  of  the  legislative  assembly,  or 
upon  the  attitude  of  the  fiduciary  corporations  in  which  the  important 
financial  interests  of  the  coimtry  are  represented,  and  the  possibilities  of 
organization  and  reorganization,  capitalization  and  over-capitalization, 
legislation,  speculation,  and  peculation,  become  practically  limitless. 
Values  may  be  juggled  indefinitely  by  means  of  stock  and  tax  manipu- 
lation, holding  companies,  subsidiary  organizations  of  various  kinds, 
transportation  arrangements,  and  in  a  thousand  other  ways  —  the  entire 
series  of  which  would  be  rendered  largely  inoperative  were  the  power  of 
forcing  prices  by  means  of  taxation  withdraw^n  from  legislative  assemblies. 

The  New  Protection,  in  some  instances,  merely  restates  the  positions 
of  the  familiar  school.  In  the  majority  of  cases,  however,  it  is  a  great 
improvement  over  the  older  doctrines,  and  the  fathers  of  Protection 
would  be  lost  in  admiration  at  some  of  the  developments  of  their  latter- 
day  disciples.  The  Old  Protection  sought  to  swell  the  profits  of  capital 
in  the  home  market;  it  was  occupied  with  domestic  conditions  alone. 
The  New  Protection  ranges  over  a  wider  field,  including  the  foreigner  — 
both  producer  and  consumer  —  within  its  more  catholic  solicitude. 
By  no  means  blind  to  the  economic  harmonies  resulting  from  the  reserva- 
tion of  the  home  market  for  its  own  use,  it  casts  its  eye  at  the  markets 
of  the  world;  home  Protection  permitting  it  to  hold  the  domestic  market 
and  dumping,  to  undersell  the  foreigner  abroad,  simultaneously. 

In  these  fields  the  New  Protection  meets  but  one  difficulty:  the  dan- 
ger of  flooding  the  home  market  with  reimported,  dumped  goods. 
Where  the  home  price  is  forced  up  by  taxation,  it  becomes,  of  course, 
possible  to  sell  correspondingly  lower  in  foreign  markets;  but  the  higher 
the  home  price  is  raised,  and  the  lower  the  foreign  price  falls,  the  greater 
the  danger  of  an  industry  being  "threatened"  by  the  "unfair"  competi- 
tion of  its  own  dumped  goods  —  the  highly  protected  dumping  industry 
is  exposed,  as  it  were,  to  an  "onslaught"  of  its  own  product  in  its  own 
market.     This  is  a  serious  difficulty,  but  as  yet  no  remedy  has  appeared. 


84  The  New  Protection  Pt.  I 

It  would  seem,  in  this  connexion,  that  the  New  Protection  should 
suggest  double  schedules:  one,  taxing  foreign  goods;  and  another,  aflFect- 
ing  domestic  goods  already  dumped  abroad.  In  this  way  alone  may  a 
people  hope  to  be  effectively  protected  against  the  unfair  competition 
of  its  own  pauper  labour.  Professor  Ashley^  approaches  this  idea  in 
part  with  his  conception  of  the  "variable, "  "elastic"  or  "easUy  handled" 
import  duty,  with  reference  to  industries  threatened  from  abroad.  This 
"elastic,"  or  "easily  handled"  duty  is  much  superior  to  the  fixed, 
protective  tax.  It  does  not,  however,  meet  all  the  needs  of  the  New 
Protection  with  reference  to  industries  threatened  by  the  reimportation 
of  their  own  products.  The  masses  might  be  confused  in  finding  their 
taxes  shifted  up  or  down  indefinitely.  The  most  practical  method  of 
meeting  this  difiiculty  seems  to  be  to  impose  a  fixed  duty  of  the  conven- 
tional kind  upon  foreign  goods;  and,  in  addition,  to  adopt  an  "elastic," 
or  "easily  handled,"  duty  which  would  shut  out  all  dumped  domestic 
goods.  In  this  way,  the  people  would  be  conscious  of  nothing  but  the 
familiar  tax,  while  the  "elastic"  duty  would  never  appear,  any  more 
than  the  normal  foreign  import  price,  as  it  need  be  used  but  for  purposes 
of  complete  exclusion.  May  not  every  argument  advanced  in  support 
of  the  highly  protected  dumping  industry  be  advanced  in  support  of 
such  a  system  of  taxation? 

Section  II — Taxation  for  the  Prevention  of  Dumping 

Dumping  involves  two  policies:  the  New  Protection  advises  that 
a  nation  should  tax  itself  in  order  to  dump  goods  in  foreign  markets; 
again,  that  a  nation  should  tax  itself  in  order  to  prevent  this  very 
thing.  If  both  positions  are  effective,  nothing  can  apparently  be 
gained  on  one  side  which  cannot  be  prevented  on  another.  The 
protectionist,  however,  prefers  to  limit  the  discussion  to  one  phase  at  a 
time. 

From  the  point  of  view  of  preventing  dumping,  a  free  trade,  or  low 
tariff,  country  is  presented  "defenceless"  in  the  midst  of  powerfully 
protected,  high  tariff  nations,  making  determined  attacks  upon 
her  ancient  industry  by  flooding  her  free  markets  with  artificially  cheap- 
ened goods;  the  protected  nations,  with  their  high  tariff  walls,  refusing,  at 
the  same  time,  to  accept  the  defenceless  nation's  output  —  a  process 
not  only  "sucking"  the  capital  out  of  the  defenceless  nation,  but  under- 
mining the  foundations  of  her  existing  industrial  system.    Such  is  the 

1  The  TariJ'  Problem,  p.  134. 


Bk.  II  Dumping  85 

picture  presented  by  the  New  Protection  of  low  tariff  countries,  England 
being  the  typical  victim. 

So  far  as  capital  is  concerned,  there  are  only  two  ways  in  which  it  can 
be  "sucked":  "The  balance  of  trade"  or  the  "attraction  of  capital," 
both  of  which  have  been  examined.  Dumping,  as  affecting  established 
industry,  may,  however,  be  considered. 

Dumping  is  no  new  thing,  doubtless  dating  from  the  birth  of  industry. 
"How  frequently,"  says  Roscher,i  "it  has  happened  that  England  by 
keeping  down  her  prices  for  a  time  has  strangled  her  foreign  rivals." 
.  .  .  "Hume,  in  the  parliamentary  session  of  1828,  uses  the  expression 
'strangulate'  to  convey  this  idea.  As  early  as  1815,  Brougham  said: 
*It  was  well  worth  while  to  incur  a  loss  on  the  exportation  of  English 
manufactures  in  order  to  stifle  in  the  cradle  the  foreign  manufacturers. ' 
The  report  of  the  House  of  Commons  on  the  condition  of  the  mining 
district  (1854)  speaks  of  the  great  losses,  frequently  in  from  three  to 
four  years,  of  £300,000  to  £400,000,  which  the  employers  of  labour  under- 
went voluntarily,  in  order  to  control  foreign  markets."  Dumping  is 
thus  a  long  established  English  policy,  the  natural  outcome  of  certain 
industrial  conditions,  and  will,  in  all  probability,  exist  as  long  as  industry. 
It  may  be  said,  however,  that  modern  dumping  bears  no  resemblance  to 
the  earlier  forms  and  may  be  carried  on  upon  a  scale  unknown  a  genera- 
tion ago,  involving  new  conditions  and  industries,  not  only  not  in  the 
cradle,  but  which  may  for  centuries  have  formed  a  vital  element  in  the 
industrial  life  of  a  threatened  population. 

There  is,  unfortunately,  one  insurmountable  difficulty  in  the  discussion 
of  dumping:  which  is  to  establish  any  accurate  method  of  distinguishing 
goods  dumped  in  the  normal  course  of  trade  from  those  dumped  owing 
to  "unfair"  causes.  Every  manufacturer  will  doubtless  find  reason  for 
believing  that  all  foreign  goods  competing  with  his  own  are  dumped; 
and  yet  the  fact  that  foreign  industry  can  undersell  in  the  home  market 
by  no  means  proves  the  foreign  price  caused  by  unfair  competition. 
Nor,  even  when  shown  that  the  foreigner  enjoys  a  governmental 
boimty  and  a  protected  price  in  his  own  market,  is  it  shown  that  he  sells 
his  goods  for  less  than  cost.  Protected  price  and  bounty  demonstrated, 
the  question  of  cost  demands  discussion  in  relation  to  other  sources  of 
supply,  and  to  the  possibility  that  the  foreign  producer  may  be  able  to 
dominate  the  home  market  without  governmental  aid,  such  taxes  and 
bounties  swelling  his  profits  without  affecting  price.    Thus,  to  prove  that 

•  Political  Economy,  Vol.  11.,  p.  437. 


86  The  New  Protection  Pt.  I 

goods  "compete  unfairly"  is  a  difficult  and  complicated  matter.  An 
effective  method  of  distinguishing  between  fair  and  unfair  competition 
yet  remains  to  be  discovered;  and,  when  discovered,  its  conclusions  for 
any  given  moment  will  be  useless  in  a  short  time,  owing  to  changing 
conditions. 

The  extreme  view  of  the  producer  will  be  that  all  foreign  goods  com- 
peting with  his  own  are  unfairly  dumped;  the  extreme  view  of  the  con- 
sumer that  the  cheapest  goods  are  the  most  desirable,  whether  dumped 
or  not  making  no  difference.  The  former  opinion  need  apparently  not 
always  be  true.  As,  in  the  case  of  the  producer,  the  question  resolves 
itself  into  a  distinction  between  fair  and  unfair  competition,  so,  in  the 
case  of  the  consumer,  the  question  arises:  Which  presents  the  best 
supply,  the  high  domestic  price,  or  the  low  import  price? 

Here  again  occurs  the  question  of  the  nature  of  the  competition.  If  the 
foreign  producer  is  able  to  undersell  constantly  in  the  home  market,  it 
seems  clear  that  he  is  the  best  purveyor.  If  the  consumer  taxes  himself 
in  order  to  shut  him  out,  it  seems  that  the  consumer  is  paying  unneces- 
sary taxes,  in  higher  price,  and  depriving  himself  of  the  salutary  in- 
fluences of  competition.  Dumping,  from  the  point  of  view  of  the 
consuming  nation,  is  by  no  means  without  compensation.  The  direct 
consumer  obviously  gains  in  lowered  price,  and  the  general  industrial  life 
of  the  nation  is  indirectly  stimulated,  through  the  importation  of  raw 
material  of  manufacture;  the  new  industries  representing  possibly  more 
capital  and  labour  than  any  displaced.  As  Professor  Smart ^  says: 
"The  steel  maker  cannot  be  expected  to  rejoice  in  dumping,  but  the 
shipbuilder,  the  galvanizer,  and  the  tinplate  worker  openly  do.  There 
is  an  almost  ludicrous  Nemesis  in  the  compensation.  America  makes 
her  own  tinplates  excessively  dear,  and  spoils  her  own  trade  in  canned 
goods.  At  the  same  time  she  dumps  cheap  steel  into  South  Wales. 
Our  tinplate  manufacturers,  in  consequence,  send  out  cheap  tin  plates 
to  Germany,  Russia,  Australia,  and  Canada,  and  give  them  a  hold  on 
the  canned  fruit  and  meat  trade  which  otherwise  America  might  have 
kept  from  them.  It  reminds  one  of  a  besieging  army  smuggling  am- 
munition and  food  into  the  beleagured  town. 

"The  Board  of  Trade  Blue  Book,  quoting  our  Consul- General  at  Ham- 
burg, says  that  there  are  four  surveyors  from  Lloyd's  Registry  stationed 
at  Diisseldorf  to  superintend  and  standardise  the  shafts  and  other  heavy 
iron  forgings  which  are  being  sold  to  English  shipbuilders  at  cheaper 

•  The  Return  to  Protection,  p.  152  et  seq. 


Bk.  II  Dumping  87 

prices  than  they  are  to  German.  So  Germany,  at  great  expense,  is 
doing  all  she  knows  to  establish  shipbuilding  and  shipping  trade,  while 
her  own  manufacturers  are  giving  us  the  materials  for  underselling  her. 
It  is  playing  our  game  as  effectually  as  if  Germany  sent  her  best  football 
players  to  play  for  us  against  a  German  team. 

"In  face  of  this  Nemesis,  then,  even  if  we  consider  that  the  compen- 
sations do  not  outweigh  the  injury,  it  would  be  well  to  have  a  little 
patience.  It  is  not  unnoticed  in  Germany  at  least.  Even  protec- 
tionist chambers  of  commerce  are  complaining,  in  so  many  words,  that 
'cheap  German  exports  of  materials  make  it  possible  for  firms  abroad 
to  offer  serious  competition  in  Germany,'  Suppose  we  found  that  our 
Clyde  steamers  were  being  built  in  Germany  because  our  Lanarkshire 
steel  makers  were  supplying  that  country  with  plates  cheaper  than  they 
would  supply  to  Glasgow;  we  should,  I  think,  have  something  to  say. 
But  this  is  what  is  happening  with  the  Rhine  steamers.  'The  building 
of  boats,'  says  the  Board  of  Trade  Blue  Book,  'for  the  Rhine  river  naviga- 
tion has  passed  over  almost  entirely  to  Holland,  because  the  works  in  the 
Rheinish-Westphalian  district,  producing  heavy  plates,  deliver  in  Hol- 
land at  lower  prices  than  in  the  interior  of  Germany.  Evidence,  in  fact, 
is  accumulating  that  this  selling  of  material  below  cost  to  the  industries 
of  a  rival  country  is  pulling  down  with  one  hand  what  is  being  built  up 
with  another.  .  .  .  It  is  of  course  from  our  iron  and  steel  industries 
that  we  hear  most  complaints  about  dumping.  Germany  exports  to 
us  pig  iron,  blooms,  angle  iron,  girders,  rails,  rolled  wire,  rolled  tubes, 
wire  nails.  America  exports  pig  iron,  iron  pipes,  bars,  bedstead  angles, 
steel,  ship  plates,  rails,  boring  machines.  Most  of  these  are  products  of 
Kartells  and  Trusts;  but,  considering  the  cheapness  of  coal  and  transport, 
and  the  difficulty  of  getting  comparative  prices — German  bars,  for 
instance,  have  often  been  of  inferior  quality  —  it  is  impossible  to  say 
what,  and  how  much  of  them  are,  properly  speaking,  'dumped.' 

"The  total  value  of  the  iron  and  steel  trade  of  Great  Britain,  Mr. 
Hugh  Bell  tells  us,  is  something  between  £150  and  £160  millions. 
Of  this  very  large  total  £15!  millions  come  as  imports;  the  remainder  is 
home  produced.  Of  this  £15!  millions,  8  millions  come  from  Germany, 
Holland,  and  Belgium.  'Is  this  paltry  quantity,' he  asks,  'going  to 
destroy  the  whole  of  our  great  industry?'  In  the  year  in  which  they  sent 
us  the  8  millions,  we  sent  them  £6f  millions  of  similar  articles.  In  the 
same  year  we  sent  America  upward  of  £10  millions  of  iron  and  steel. 
I  should  be  interested  in  knowing,'  he  continues  relentlessly,  'the  names 


88  The  New  Protection  Pt.  I 

of  firms  whose  liquidation  has  been  due  to  foreign  dumping.  I  know  of 
none,  but  I  do  know  of  many  who  would  have  had  the  greatest  difficulty 
in  weathering  the  bad  trade  of  the  last  three  years  had  cheap  foreign 
steel  been  denied  them.'" 

Dumping  may,  in  a  free  trade  market,  have  a  salutary  effect  in  keeping 
prices  at  a  normal  level :  one  of  the  important  objects  of  Free  Trade. 
Low  prices,  even  in  dumping  industries,  may  be  due  to  natural  as  well 
as  artificial  advantages,  thus  rendering  practically  impossible  a  definite 
and  workable  distinction  between  fair  and  unfair  dumping. 

"The  Bessemer  process,"  says  Mr.  Hugh  Bell,^  "required  pig  iron  of 
pure  quality.  The  ores  of  Lancashire  and  Cumberland  afforded  this, 
but  they  alone  did  not  suffice.  Spain  was  called  on  to  redress  the  bal- 
ance; and  we  find  that  what  amounted  to  under  half  a  million  tons  in 
1875,  .  .  .  amounted  to  no  less  than  5,310,000  tons  in  1902. 
But  the  production  of  pig  iron  from  home  ores  continued  nevertheless. 
Puddled  iron,  replaced  by  steel  for  rails  and  many  other  purposes, 
still  found  an  outlet  in  the  materials  used  for  shipbuilding.  With  the 
flexibility  for  which  the  trade  is  remarkable,  capital  flowed  into  plate 
mills,  and  prosperity  returned.  Fate  had,  however,  another  arrow  in 
her  quiver.  The  problem  of  eliminating  phosphorus,  the  noxious 
ingredient  in  pig  iron,  had  long  occupied  men's  minds.  Its  solution 
is  due  to  Englishmen,  to  whom  the  world  owes  most,  if  not  all,  of  the 
great  improvements  which  have  been  made  in  iron  manufacture.  The 
basic  process  invented  by  Messrs.  Thomas  &  Gilchrist,  and  brought  to 
practical  success  by  Messrs.  Vaughan  &  Co.,  at  Middlesbrough,  was 
fraught  with  even  greater  disaster  to  the  British  iron  trade.  The 
ordinary  pig  iron  of  this  country,  and  more  especially  that  produced  from 
Cleveland  iron  stone,  is  remarkably  unsuited  for  use  in  the  basic  Bessemer 
converter.  On  the  other  hand,  the  ores  of  Germany,  and  certain  other 
countries,  yield  a  pig  iron  which  could  not  be  bettered  for  that  purpose. 
A  statement  of  the  technical  grounds  for  this  assertion  would  be  out  of 
place  in  this  paper.  It  suffices  to  say,  that  such  a  statement  would  ab- 
solve the  British  iron  master  from  all  blame  in  having  seen  the  basic 
process  develop  in  Germany  with  giant  strides,  while  it  made  relatively 
little  progress  in  this  country."  "This  is  a  curious  example,"  adds  Mr. 
Bell  in  a  note,  "of  the  way  in  which  many  people  take  obvious  instead 
of  the  real  explanation  of  economic  phenomena.  The  development  of 
German  industry  is  attributed  to  the  protective  policy,  with  which  it 

'  Protection  and  the  Steel  Trade,  The  Independent  Review,  October  1903,  pp.  70,  71. 


Bk.  II  Dumping  89 

only  synchronised,  instead  of  to  the  Thomas  Gilchrist  process,  which 
permitted  the  growth  of  the  German  iron  trade. " 

The  application  of  such  considerations  may,  however,  be  admitted, 
and  the  "mystery  of  dumping"  regarded  as  still  unsolved.  It  is  naturally 
to  free  trade  England  that  the  dumping  policy  of  highly  protected 
countries  presents  the  gravest  dangers  and  where  Protection  would 
supposedly  cause  the  greatest  gain.  Although  closely  allied  considera- 
tions may  be  advanced  with  reference  to  any  other  country,  the  case  in 
favour  of  the  import  duty  as  affecting  English  industry,  threatened  by 
foreign  dumping,  may  be  put  as  follows: 

A  land-owning  legislature,  in  control  of  the  fiscal  policy  of  Great 
Britain,  gradually  developed  the  system  of  food  taxation  known  as  the 
Corn  Laws.  Taxes  had  also  accumulated  on  manufactures,  but  owing 
to  the  dominant  influence  of  the  land-owning  class  these  were  of  less 
importance,  and  until  the  ministries  of  Lord  Palmerston  and  Sir  Robert 
Peel  the  landed  interests  had  no  difiiculty  in  controlling  taxes  and  legis- 
lation. The  Corn  Laws  were  the  natural  outcome  of  a  protective 
land-owning  Assembly.  During  the  earlier  decades  of  the  last  century, 
however,  a  new  influence  arose  in  Parliament:  that  of  manu- 
facturing capital.  The  result  was  a  victory  for  Free  Trade  and  the  repeal 
of  the  Corn  Laws.  This  victory  was  an  expression  of  the  desire  of  British 
manufacturing  capital  for  wider  markets  on  one  hand,  and  cheaper  food 
supply  on  another,  by  means  of  which  their  interests  could  be  protected. 
As  pointed  out,  the  repeal  of  the  Corn  Laws,  in  a  food  importing  country, 
was  as  much  a  manufacturing  protective  measure  as  an  import  duty  on 
manufactures  in  a  food  exporting  country.  Morley^  says:  "There  was 
in  this  nothing  that  is  either  astonishing  or  discreditable.  The  impor- 
tant fact  was  that  the  class-interest  of  the  manufacturers  and  merchants 
happened  to  fall  in  with  the  good  of  the  rest  of  the  community;  while 
the  class-interest  against  which  they  were  going  up  to  do  battle  was  an 
uncompensated  burden  on  the  commonwealth."  .  .  .  "With  a 
population  increasing  at  the  rate  of  a  thousand  souls  a  week,  how  can 
wages  be  kept  up?"  he  asks,  "unless  there  be  constantly  increasing 
markets  found  for  the  employment  of  labour;  and  how  can  foreign 
countries  buy  our  manufactures,  unless  we  take  in  return  their  corn, 
timber,  or  whatever  else  they  are  able  to  produce?"  Speaking  of 
funds  raised  in  this  connexion,  Morley  says:^    " Men  contributed  freely 

'  Richard  Cobden's  Life,  by  John  Morley,  p.  gs- 
'  Ibid.,  p.  167. 


90  The  New  Protection  Pt.  I 

because  they  knew  that  the  rescue  of  their  capital  depended  on  the  open- 
ing of  the  markets  from  which  the  protection  of  corn  excluded  them. " 

This  Free  Trade  form  of  Protection  was  expected  to  make  England 
the  manufacturing  centre  of  the  world.  With  her  large  population, 
small  area,  and  unrestricted  food  importation,  it  was  assumed  that  Eng- 
land would  be  the  most  highly  protected  country  in  the  world.  Other 
countries,  it  was  supposed,  would  be  induced  by  this  protective  Free 
Trade  to  occupy  themselves  with  the  production  of  grain  and  raw 
materials,  leaving  the  more  advanced  and  highly  finished  products 
to  Great  Britain,  in  which  less  developed  countries  would  never  be 
able  to  compete  with  her. 

As  a  result  of  this  policy,  English  manufactures  greatly  flourished  for  a 
time,  but  during  the  seventies  and  eighties  of  the  last  century  their 
growth  seems  to  have  been  arrested  by  various  causes,  but  partly 
through  English  aid  in  establishing  manufacturing  centres  abroad,  and 
through  the  unforeseen  development  of  foreign  industry  by  means  of 
modern  methods.  Nor  is  this  all,  nor  the  worst,  from  the  protective 
point  of  view.  Foreign  nations,  instead  of  adopting  England's 
more  liberal  policy,  not  only  hedged  themselves  about  with  bristling 
tariff  fortifications,  but,  by  means  of  taxes  and  subsidies,  cast  designing 
eyes  upon  England's  own  market:  an  unexpected  turn  of  affairs. 

Thus  England,  instead  of  standing  alone  as  the  manufacturing  centre 
of  the  world,  stands  alone  indeed,  but  as  the  most  vulnerable  object  of 
manufacturing  attack.  Free  Trade,  it  seems,  has  been  tried  and  found 
wanting.  Again,  this  threatening  of  England's  industry  is  of  an  excep- 
tionally annoying  and  dangerous  nature.  Were  it  always  due  to  a  con- 
stant policy  and  improved  methods,  the  results  would  be  bad  enough, 
but  such,  it  is  said,  is  not  the  case.  The  dumping  may  be  intermittent, 
and  naturally  occurs  at  times  of  depression  when  likely  to  do  most  harm. 
Thus  the  English  producer  may  find  a  weak  market  suddenly  flooded 
with  foreign  goods  dumped  at  a  price  which  the  foreigner  cannot  support 
permanentlynor  without  governmental  aid;  the  foreigner  simply  adopting 
the  intermittent  and  irresponsible  dumping  of  surplus  in  an  unprotected 
market,  the  import  price  bearing  no  relation  to  cost,  either  at  home  or 
abroad.  If  the  foreigner  is  successful  in  these  attacks  and  destroys  the 
English  industry,  he  may  raise  or  lower  prices  as  he  pleases  in  such  a  way 
that  unaided  competition  is  impossible.  These  are  the  evils  of  dumping 
as  affecting  the  producer  in  low  tariff  countries.  The  political  danger 
of  allowing  the  industrial  system  of  a  country  to  become  dependent 


Bk.  II  Dumping  91 

upon  foreign  supply  may  be  pointed  out,  together  with  the  menace  to 
labour  in  such  irresponsible  competition.  Thus,  it  is  said,  while  English 
industry  demanded  Free  Trade  half  a  century  ago,  modern  methods 
and  existing  tariffs  have  changed  conditions,  and  changing  conditions 
demand  changing  measures. 

Such  are  the  considerations  dwelt  upon  by  the  New  Protection.  The 
argument  in  favour  of  taxing  a  population  to  support  threatened 
industries  has  a  sound  not  unlike  the  wail  of  the  "infant  industry"  in  its 
decline.  Thus,  industry,  it  seems,  needs  Protection  in  the  first  stages 
of  its  growth,  all  through  the  period  of  its  maturity,  and  here,  at  last, 
when  no  longer  able  to  hold  its  own.  When,  however,  a  dangerous  policy 
of  intermittent  dumping,  aimed  at  the  established  industry  of  England, 
or  of  any  other  country,  is  recognized,  the  question  of  a  remedy  arises. 
"No,"  says  Professor  Ashley,^  "there  is  apparently  no  way  of  meeting 
the  danger  which  such  imports  threaten  to  national  prosperity  and 
political  security,  but  the  employment  of  the  only  economic  weapon  of 
defence  which  the  State  possesses  —  viz.,  import  duties. "  It  is,  how- 
ever, clear  that  the  ordinary  fixed  duty  is  of  no  value  against  inter- 
mittent dumping;  the  dumping  price  may  be  so  low  that  only  exclusion 
could  obtain  the  desired  result.  The  quantity  of  goods  dumped  may  be 
so  great,  and  the  dumping  occur  so  suddenly,  or  at  such  an  inopportune 
time,  that  no  fixed  import  duty  would  be  effective. 

The  New  Protection  is  alive  to  these  difficulties;  the  remedy  being 
in  this  instance,  however,  the  variable,  easily  handled,  or  elastic  import 
duty.  "There  remains  then,"  says  the  author  cited,^  "for  present  con- 
sideration, the  question  of  defensive  tariffs;  and  one  must  begin  by 
pointing  out  that  this  purpose  will  not  be  served  by  a  general  all-round 
low  or  even  moderate  customs  duty.  No  low  or  even  moderate  duty  will 
suffice  to  keep  out  foreign  goods  when  they  are  being  sold  at  any  price 
to  'relieve'  the  domestic  market.  .  .  .  What  seems  dictated  by 
the  requirements  of  the  case  is  the  statutory  authorization  of  the  Execu- 
tive to  impose  the  duties  that  may  be  required  from  time  to  time  as  the 
circumstances  arise.  ...  A  poHcy  more  'elastic,'  more  easily 
handled,  is  what  is  required. " 

This  is  the  "elastic,"  "easily  handled"  import  duty  of  the  New 
Protection.  Before  it  the  fixed  duty  with  its  great  possibilities  pales 
into  insignificance.     May  it  not  be  asked,  once  such  an  "elastic"  or 

'  The  Tarijf  Problem,  p.  131, 
» Ibid.,  pp.  I32-I34' 


92  The  New  Protection  Pt.  I 

''easily  handled"  system  of  taxation  is  established,  to  whom  would 
sufficient  economic  insight  be  given  to  perceive  clearly  and  impartially 
whether  certain  prices  of  certain  goods  represented  fair  or  unfair  com- 
petition, natural  or  unnatural  industrial  conditions?  By  means  of  what 
inexplicable  process  could  the  human  mind  decide  whether  certain 
industries  could  or  could  not  meet  certain  prices  with  reference  to  the 
ultimate  national  good?  The  mere  suggestion  of  the  "elastic"  duty 
reveals  in  the  New  Protection  one  of  the  most  noteworthy  examples 
of  the  faith  in  the  infinite  wisdom  of  the  politician  to  be  found  in 
economic  history. 

To  the  more  or  less  sophisticated  observer,  however,  the  question 
arises  whether  such  "elastic"  taxes  would  not  possess  a  certain  market 
value,  in  the  industrial  centres  under  their  influence.  Could  not  values 
be  manipulated  at  will  with  such  flexible  duties  and  that  without 
responsibility?  Even  the  suspicion  in  the  mind  of  an  active  and  well 
meaning  official  that  certain  foreigners  were  contemplating  an  "on- 
slaught" would,  of  course,  be  excuse  for  putting  the  functions  of  such 
versatile  taxes  to  the  test,  and  studying  their  elastic  effects  on  the  stock 
market. 

However,  if  desirable  industries  are  threatened  by  foreign  dumping, 
it  may  be  asked  whether  they  may  not  be  aided  without  inflicting  a 
population  with  the  possibilities  of  an  elastic  and  easily  handled  system 
of  protective  taxation?  It  is  obvious  that  the  flexible  duty  itself  is  not 
the  support  required;  the  money  produced  by  means  of  higher  prices 
at  certain  times  is  the  real  assistance;  the  money  is  the  protection,  not 
the  duty,  the  latter  being  but  a  means  to  an  end.  There  are  two  ways 
to  provide  money  for  a  nation's  desirable  and  threatened  industries :  one, 
to  surrender  the  power  of  taxing  it  blindly  and  indefinitely  with  import 
duties;  another,  to  draw  on  the  public  treasury  for  the  specific 
purpose  at  the  specific  time  to  the  desired  extent;  in  other  words,  to  aid 
the  industry  as  far  as  necessary  and  no  more.  It  may,  of  course,  be 
said  that  the  handing  about  of  public  money  through  direct  subsidies 
and  bounties  may  be  a  source  of  official  corruption.  Such  corruption 
is  probably  a  foregone  conclusion.  It  seems,  however,  that  the  possi- 
bilities of  official  corruption  offered  by  publicly  acknowledged  subsidies, 
great  as  they  may  be,  are  none  the  less  as  a  drop  in  the  ocean  in  com- 
parison with  official  corruption  caused  by  protective  import  duties. 
The  indirect  method  of  protecting  threatened  industry- presents  all  the 
complexity  and  expense  of  every  phase  of  Protection  in  their  incal- 


Bk.  II  Dumping  93 

culable  results;  the  direct  method  is  simple  and  obvious  and  involves 
no  expense  other  than  the  necessary  amount,  which  would  be  partly 
counteracted  in  the  lower  prices  enjoyed  by  the  people  during  the 
defensive  period. 

"If,  however,"  says  Professor  Smart,*  "Protection  is  the  only  remedy 
for  Dumping,  we  may  well  hesitate.  A  man  may  be  suffering  from  a 
slight  cold,  but  may  object  to  take  a  medicine  that  will  throw  him  into 
fits. 

"The  moment  we  admit  that  Dumping  is  a  claim  for  counter  duties, 
we  seem  to  have  taken  a  long  step  and  a  perilous  one.  At  what  stage 
in  the  Dumping  is  the  aid  of  the  State  to  be  invoked?  Is  it  when  a 
thousand  tons  have  been  dumped,  or  a  hundred  thousand,  or  a  million? 
Surely,  a  smaller  trade  may  be  ruined  by  dumping  before  any  large 
figure  is  reached.  Or  are  we  to  stop  the  danger  before  it  emerges,  by 
putting  'an  average  duty  of  10  per  cent.'  on  all  manufactures? 

"And  who  is  to  decide  what  is  Dumping,  as  distinguished  from  'fair 
competition?'  Is  it  selling  at  cost? — or  under  cost? — or  far  under 
cost?  What  is 'cost'?  When  the  students  in  a  Political  Economy  class 
have  got  to  the  length  of  answering  that  question  they  have  very  little 
more  to  learn. " 


'  The  Return  to  Protection,  p.  167. 


CHAPTER  V 


THE   TARIFF-WEAPON 


Section  I — The  Import  Duty  as  a  Weapon.     Section  II — The  Tariff 
Weapon  and  Trade.     Section  III — Tariff  Warfare. 


Section  I— The  Import  Duty  as  a  Weapon 

THE  new  era  of  Protection  does  not  depend  upon  ordinarily 
announced  conceptions  of  trade  and  industry  alone.  The 
more  or  less  narrow  and  individualistic  political  economy  of 
Smith  and  Mill  has  been  superseded,  it  is  said,  by  a  wider 
view  of  the  needs  of  a  people  as  a  whole;  by  a  broader  interpretation  of 
the  national  and  political  life  than  that  of  the  earlier  economic  writers. 
International  relations  have  recently  become  more  intimate  and  com- 
plex; Mill  could  scarcely  have  foreseen  the  existing  national  inter- 
dependence, commercial  and  fiscal,  while  Smith  could  not  have  con- 
ceived it. 

The  new  protective  era,  as  shown  in  a  passage  cited,  arises,  neither 
because  economists  have  been  unable  to  understand  the  arguments  of 
the  older  free  trade  school,  nor  because  capital  has  been  able  to  dom- 
inate the  fiscal  policy  of  government;  "it  arises  from  a  motive  which 
is  rather  instinctively  felt  than  clearly  understood,  viz.,  that  tariffs  are 
international  weapons  (Machtmittel)  which  may  benefit  a  country,  if 
skillfully  used."  1 

The  reasons  advanced  in  support  of  a  system  of  taxation  to  be  used 
in  this  way  are  many;  ranging  from  the  various  German  schools,  repre- 
sented by  the  writings  of  Professors  Wagner,  Oldenburg,  Pohle,  and 
the  more  moderate  positions  of  Professors  Schmoller,  Conrad  and  Sering, 
to  the  retaliatory  suggestions  of  Mr.  Balfour.  "The  only  alternative, " 
says  the  latter,  2  "is  to  do  to  foreign  nations  what  they  always  do  to  each 
other,  and,  instead  of  appealing  to  economic  theories  in  which  they 
wholly  disbelieve,  to  use  fiscal   inducements  which    they  thoroughly 

*  Professor  Gustav  Schmoller,  cited  by  Professor  Ashley,  The  Tarif  Problem,  p.  30- 
'  Cf.  Professor  Smart.     The  Return  to  Protection,  p.  121. 

94 


Bk.  II  The  Tariff-Weapon  95 

understand."  Or,  again,  extending  from  the  more  crystallized  fiscal 
system  of  France  to  the  "dynamic  and  progressive"  policy  of  the 
United  States. 

Other  considerations  occur  in  this  connexion  —  considerations  largely 
independent  of  the  usual  economic  positions,  and  which  suggest 
the  protective  system  of  trade  regulation,  despite  economic  disad- 
vantage. The  danger  of  allowing  a  nation  to  become  dependent  upon 
a  foreign  food-supply  may  be  pointed  out;  again,  attention  may  be 
called  to  the  disadvantages  of  placing  any  great  industry,  entering 
into  national  defence,  at  the  mercy  of  foreign  producers.  A  mere 
agreement  between  foreign  powers  might  cripple  a  nation  in  such  a 
position.  The  import  duty  may  thus  possess  a  significance  independent 
of  economic  or  industrial  advantage.  Protective  taxes,  levied  upon  such 
grounds,  may  be  used  to  prevent  a  nation  from  being  put  in  dependent 
political  positions,  and  urged  irrespective  of  industrial  and  financial  loss. 
Such  considerations  enter  largely  into  the  German  and  English  schools 
of  the  later  Protection,  and  are  worthy  study.  They  recall  Adam 
Smith's  1  position  with  reference  to  the  English  Navigation  Acts.  He  says 
that  it  may  be  advantageous  to  lay  some  burden  upon  foreign  industry', 
"when  some  particular  sort  of  industry  is  necessary  for  the  defence  of 
the  country. "  Adam  Smith  may  thus  be  quoted  in  support  of  such 
taxes,  modem  conditions  adding  weight  to  these  considerations.  After 
a  review  of  Smith's  position  with  reference  to  the  English  Navigation 
Acts,  Professor  Ashley  says: 2 

"Smith,  it  will  be  perceived,  was  much  less  cosmopolitan  than  many 
of  his  followers;  he  had  strong  national  feelings;  and  he  did  not  anticipate 
an  unbroken  era  of  international  peace.  Moreover,  he  did  not  think  it 
his  business  as  an  economist  to  disregard  political  considerations,  nor 
did  he  apologise  for  introducing  'non-economic'  arguments.  But  the 
alarm  of  the  Free  Trade  precision  at  Smith's  concession  was  altogether 
justified;  for  it  opens  the  door  to  very  much  more  than  its  author  con- 
templated. One  wonders,  for  instance,  what  Smith  would  have  said 
to  the  present  condition  of  affairs  when  the  English  people  are  dependent 
upon  importation  for  more  than  three-quarters  of  its  bread,  and  for 
almost  half  of  it  upon  importation  from  a  country  with  which  we  have 
quite  recently  seemed  on  the  verge  of  war.     Or,  again,  if  he  had  lived 


»  The  Wealth  of  Nations,  Bk.  IV.,  ch.  ii.,  p.  35. 
»  The  Tari£  Problem,  p.  36. 


96  The  New  Protection  Pt.  I 

in  these  days  of  steel-built  battleships,  would  he  have  viewed 
with  equanimity  a  state  of  things  which  may  well  make  its  ap- 
pearance —  a  flourishing  shipbuilding  trade  absolutely  dependent 
upon  importation  for  the  cruder  forms  of  steel  which  it  needs  as  its  raw 
material?" 

This  is  an  important  passage,  and  presents  considerations  not 
to  be  brushed  aside  by  economic  generalizations.  The  passage 
cited  applies  chiefly  to  England ;  the  considerations  suggested,  however,  are 
of  equal  significance  with  reference  to  any  nation  importing  to  any 
extent  food  staples  and  the  raw  materials  of  the  steel,  iron  and 
shipbuilding  industries.  The  import  duty  here  appears  in  a  new 
field.  The  import  duty,  as  a  weapon,  may  or  may  not  be  a  protec- 
tive industrial  measure;  the  weapon  tax  is  an  ultra-economic  instru- 
ment, or  tool,  which  may  be  used  to  threaten,  protect,  formulate, 
injure  or  reward,  as  conditions  dictate  and  as  the  best  interests  of  the 
nation  demand. 

It  is  essential,  at  the  outset  of  an  inquiry  into  the  nature  of  the  tariff- 
weapon,  to  draw  a  distinction  between  the  tariff -weapon  as  such,  and  the 
purposes  for  which  that  weapon  may  be  used.  Thus,  if  the  import  tax 
is  used  in  order  to  make  money  flow  toward  a  country,  it  is  attracting 
capital,  or  regulating  the  balance  of  trade;  and  the  tax  applied  to  these 
purposes  should  be  discussed  under  those  headings.  If  used  to  exclude 
the  foreign  producer,  it  is  encouraging  industry  or  protecting  labour, 
and  such  a  tax  can  be  studied  but  in  relation  to  those  positions.  The 
importance  of  this  distinction  is  marked;  the  tax  is  here  studied  as  a 
weapon  alone. 

Upon  closer  analysis,  many  of  the  arguments  used  in  favour  of  the 
tariff-weapon  will  be  found  to  be  pure  Protection,  either  of  the  old  or 
newer  school.  With  the  elimination  of  these,  the  tariff-weapon  may  be 
studied  from  two  positions:  the  economic  and  the  non-economic.  The 
first  presents  the  use  of  the  fiscal  system  of  a  nation  as  a  means  of  obtain- 
ing industrial  concessions  and  advantages  from  other  nations;  the  second 
is  chiefly  concerned  with  the  purely  militant  phase  of  the  subject,  in  its 
relation  either  to  industrial  or  actual  warfare.  The  tariff-weapon  will, 
therefore,  be  studied  under  two  headings:  the  Tariff- Weapon  and  Trade, 
and  Tariff  Warfare. 

A  tax  can  be  used  as  a  weapon  in  but  two  ways.  It  can  be  put 
on  or  taken  off;  there  is  apparently  nothing  else  to  do  with  it, 
and  the  weapon  used  in   reference   to   warfare   and   trade   seems   to 


Bk.  II  The  Tariff-Weapon  97 

exhaust  the  subject,  for  one  involves  the  imposition  of  taxes,  the  other 
their  repeal. 

Section  II — The  Tariff- Weapon  and  Trade 

Article  I  — Diplomacy. 

In  the  study  of  a  complex  subject,  it  is  sometimes  useful  to  attempt 
to  express  its  fundamental  principles  as  simply  as  possible,  in  order  to 
develop  its  essential  features;  an  analysis,  then,  of  these  few  fundamentals 
may  present  the  original  problem  in  clearer  light.  There  is  one  danger 
in  inquiry  of  this  kind  —  that  of  tracing  analogy,  where  no  analogy 
exists;  conclusions  based  upon  these  will,  of  course,  be  valueless. 

This  method,  however,  seems  available  in  the  present  instance.  Inter- 
national commerce  is  trade;  trade  is  the  exchange  of  commodities. 
Trade  between  nations  is  the  transfer  from  one  to  another  of  a  great 
number  of  material  things,  their  number  or  variety  having  nothing  to  do 
with  the  essential  conditions  involved.  There  is,  apparently,  no  dis- 
tinction in  principle  between  the  exchange  of  a  million  commodities  for 
a  million  others,  and  the  exchange  of  one  commodity  for  another.  Trade 
therefore,  between  nations  is  not  much  the  same  thing  as  trade  between 
individuals,  but  identically  the  same  thing.  By  means  of  the  introduc- 
tion of  money  and  the  balance  of  trade,  this  truth  may  be  obscured,  and 
the  "practical"  politician,  together  with  the  popular  protectionist,  seem 
to  imagine  that  international  trade  is  some  form  of  jugglery,  in  which 
money  or  capital  is  tossed  in  the  air  by  invisible  bands,  to  be  caught  by 
whichever  nation  spreads  the  most  astutely  constructed  maze  of  taxes. 
The  introduction  of  money  does  not  change  the  nature  of  international 
commerce;  for  the  reason  that  money,  or  the  international  money,  gold, 
circulates  between  nations  at  its  intrinsic  or  bullion  value  alone,  and 
consequently,  in  this  connexion,  is  as  much  a  commodity  as  any  other. 
It  is  simply  one  of  an  infinite  number  of  terms  in  which  total  exchange 
is  effected. 

This  position  has  been  discussed  imder  the  "Balance  of  Trade,"  with 
reference  to  this  phase  of  the  tariff-weapon  of  the  New  Protection. 
"Fleets  and  armies  are  maintained,  not  with  gold  and  silver,  but  with 
consumable  goods, "  says  Adam  Smith.  ^  If  this  is  true  in  time  of  war, 
it  may  seem  equally  so  with  reference  to  the  "fleets  and  armies  "of 
normal  commerce. 

The  abler  thought  of  the  New  Protection,  in  both  England  and  Ger- 

1  The  Wealth  of  Nations.     Bk.  IV..  ch.  i..  p.  13. 


98  The  New  Protection  Pt.  I 

many,  recognizes  that  trade  between  nations  is  but  the  exchange  of  equal 
values  represented  by  consumable  goods.  "Since  one  nation  can  last- 
ingly pay  another  nation  only  with  its  own  products,"  says  Roscher,i 
"any  limitation  of  imports  must,  under  otherwise  equal  circumstances, 
be  attended  by  a  corresponding  limitation  of  exports. " 

"The  notion  that  foreign  nations  can  sell  everything  to  us  and  take 
nothing  in  exchange  except  money  is,  of  course,"  says  Professor  Ashley, ^ 
"one  of  the  fallacies  of  popular  protectionism.  In  the  long  run  —  unless 
the  prosperity  of  a  nation  is  very  rapidly  declining  indeed,  and  when 
such  a  time  comes  there  is  not  likely  to  be  any  doubt  about  it  —  goods 
are  paid  for  by  goods  or  services. " 

The  New  Protection  is  thus  in  harmony  with  the  best  economic  thought 
in  the  opinion  that  international  trade  may  be  expressed  in  terms  of 
commodities  or  services.  The  exchange  of  one  loaf  of  bread  for  one 
pair  of  boots  differs  in  no  way  in  nature  from  the  exchange  of  a  million 
loaves  and  a  million  pairs  of  boots;  nor,  if  the  bread  and  boots  are  again 
changed  into  an  infinite  number  of  commodities,  among  which  may  be 
gold  in  any  proportion,  is  the  principle  of  the  transaction  altered,  which 
is  simply  the  exchange  of  equivalent  values  expressed  in  material  things. 
It  seems,  therefore,  that  a  perfect  analogy  may  be  traced  between 
individual  and  national  trade  and  that,  in  consequence,  conclusions 
applying  to  the  nature  of  one  apply  to  the  nature  of  the  other. 

It  may  be  supposed  then,  in  order  to  study  the  action  of  the  tariff- 
weapon,  that  the  village  baker  and  shoemaker  have  ceased  to  trade  with 
each  other,  owing  to  some  long  standing  feud.  After  a  time,  however, 
the  baker  discovers  that  making  his  own  shoes  or  paying  a  higher  price 
for  them  in  a  neighbouring  village,  is  becoming  a  tedious  and  expensive 
process,  as  his  children  grow  up.  The  shoemaker  has  had  a  like  experi- 
ence in  bread  baking,  and  negotiations  are  opened  with  reference  to 
trade.  The  advantages  of  the  feud  are  here  evident;  without  it,  they 
would  both  be  "defenceless";  that  is,  they  would  both  be  buying 
bread  and  boots  in  the  best  market.  The  feud,  however,  has  been  bitter 
and  expensive.  Inthis  way,  both  parties  are  fully  "armed."  The  shoe- 
maker's weapon  is  his  refusal  (import  duty)  to  buy  bread  from  the 
baker,  and  vice  versa;  in  other  words,  the  shoemaker  is  "armed"  only 
when  he  pays  more  for  bread  than  it  is  worth;  unless  he  does  so,  he  is 
"defenceless." 


'  Political  Economy.  Vol.  II.  p.  424. 

'  The  Tariff  Problem,  p.  99,  3d  edition,  191 1. 


Bk.  II  The  Tariff- Weapon  99 

Negotiations  may  be  supposed  to  proceed  along  the  following  lines; 
The  baker  approaches  the  shoemaker  and  offers  to  buy  boots  on  condi- 
tion that  the  shoemaker  buy  his  bread,  that  is,  remove  or  lower  an 
import  duty.  The  shoemaker,  however,  is  too  intelHgent  to  be  caught 
in  the  snare  of  buying  better  bread,  as  the  baker  suggests.  He  sees  some 
scheme  behind  these  fair  proposals,  and,  at  the  same  time,  an  opportunity 
of  gaining  additional  advantages.  He  decides  to  wield  his  "weapon"  in 
fact.  He,  therefore,  declines  to  buy  bread,  imless  the  baker  agrees  to 
buy  shoes  from  him,  as  well  as  boots.  The  great  possibilities  of  the 
"weapon"  then  dawn  upon  the  mind  of  the  baker;  after  long  consider- 
ation, he  issues  the  following  ultimatum  to  the  shoemaker:  he  agrees 
to  buy  boots  and  shoes,  on  condition  that  the  shoemaker  grant 
him  certain  concessions  with  reference  to  buns.  It  is  evident  that  the 
need  arises,  at  this  juncture,  for  wise  and  skillful  negotiation;  what 
is  the  relation  between  the  profits  derived  from  the  trade  in  shoes  and 
buns,  and  what  relation  do  these  profits  bear  to  the  trade  in  boots 
and  bread?  The  wisdom  of  the  shoemaker  will  be  tried  at  this  point; 
it  is  by  no  means  easy  to  estimate  these  relations  exactly,  and  he  must, 
of  course,  avoid  granting  the  baker  more  valuable  concessions  than  he 
himself  obtains;  otherwise  the  shoemaker's  money  will  instantly  begin 
to  "flow"  toward  the  baker,  through  the  balance  of  trade.  Besides 
these  difficulties,  the  baker,  who  might  have  been  employed  in  an  embassy 
in  his  youth  and  thus  have  learned  something  of  diplomacy,  has  perhaps 
added  a  "most  favoured  baker  clause"  to  his  ultimatum,  thus  adding  to 
the  complexities  of  the  situation.  How  much  trade  might  the  shoe- 
maker lose  through  the  introduction  of  this  clause,  and  what  is  the  rela- 
tion between  the  possible  loss  on  one  side  and  the  possible  gain  in  ac- 
cepting the  ultimatum?  Even  the  most  intelligent  shoemaker,  well 
versed  in  the  prices  and  profits  of  boots  and  shoes,  and  even  of  bread 
and  buns,  might  have  difficulty  in  solving  these  problems.  The  sub- 
ject is  becoming  involved  in  a  diplomatic  haze.  If  the  shoemaker 
accepts  the  ultimatum,  he  wiU  be  obliged  to  buy  his  bread  and  buns 
in  the  best  market;  while,  on  the  other  hand,  owing  to  the  "most  favoured 
baker  clause,"  the  shoemaker  would  be  defenceless  as  far  as  rolls  and 
tarts  were  concerned,  and  might  have  to  buy  these  in  the  best  market 
as  well;  which,  of  course,  might  be  a  very  serious  matter,  as  any  one 
knows,  who  is  familiar  with  the  mysteries  of  diplomacy  and  the  dangers 
of  the  balance  of  trade.  Besides  these  complications,  the  "  most  favoured 
baker  clause"  might  affect  the  price  of  slippers  in  some  roundabout  way, 


lOO 


The  New  Protection  Pt.  I 


and  thus  create  still  another  diflSculty:  not  only  obliging  him  to  buy 
rolls  and  tarts  in  the  best  market,  but  possibly  affecting  his  slipper 
trade  in  such  a  way  that  he  could  buy  better  slippers  than  he  could 
produce  himself.  The  ''most  favoured  baker  clause"  stipulates  that 
the  goods  of  the  baker  should  be  purchased  on  terms  equally  favourable 
with  those  of  any  other  baker,  and  the  shoemaker  must  protect  himself 
against  the  dangers  such  possibilities  might  create.  When  the  difl&culty 
of  solving  the  question  is  understood,  it  may  well  appear  necessary  for 
the  shoemaker  to  call  in  a  lawyer  from  the  city  to  aid  m  the  negotiations. 
The  lawyer,  with  his  superior  intellectual  training,  at  once  per- 
ceives the  subject  to  be  one  demanding  great  diplomatic  skill  and 
finesse;  he,  therefore,  after  long  reflexion  and  exhaustion  of  all  statis- 
tical information,  makes  a  tempting  counter  proposition  to  the  baker, 
who,  not  to  be  outdone  by  the  shoemaker,  employs  another  lawyer. 
These  gentlemen,  understanding  matters  of  this  kind  much  better  than 
the  baker  and  the  shoemaker,  at  once  get  to  work  on  a  really  "practical" 
basis,  and  soon  develop  a  new  series  of  negotiations,  involving  systems 
and  counter-systems  of  retaliation  and  counter-retaliation,  duties, 
drawbacks  and  rebates,  together  with  various  indirect  forms  of  re- 
strictions and  revised  methods  of  classification,  by  means  of  which 
boots  could  be  classed  with  slippers,  and  bread  with  tarts;  counter- 
vailing duties  and  ad  valorem  duties,  with  and  without  detailed  sliding 
scales  of  maximum  and  minimum  rates,  specific  duties  and  conditional 
duties;  taxes,  surtaxes  and  compensating  surtaxes;  duties  imposed 
with  and  without  reference  to  excise,  duties  with  drawbacks  and  with- 
out drawbacks,  preferences,  and  shipping  preferences,  maximum  and 
minimum  tariffs,  general  and  conventional  rates,  revised  methods  of 
valuation,  with  and  without  reference  to  import  and  excise  duties; 
harbor  dues,  stamps,  autonomous  tariffs,  and  different  forms  of  taxes 
affecting  package  and  raw  materials,  by  means  of  which  the  prices  of 
goods  are  affected  in  a  thousand  ways,  without  taxing  the  goods  them- 
selves, and  a  host  of  other  complicated  restrictions,  checks  and  counter- 
checks, limitations  and  prohibitions  upon  which  it  is  unnecessary  to 
dwell.  The  haze  here  settles  into  an  impenetrable  fog.  The  baker 
and  the  shoemaker  can  form  no  conception  of  what  the  lawyers  are 
doing;  the  lawyers  themselves  can  form  no  such  conception,  shown  by 
the  fact  that  they  often  produce  the  most  undesired  and  unexpected 
results.  The  poor  baker  and  shoemaker  have,  of  course,  no  compre- 
hension of  the  matter  and  the  process  being  a  profitable  one  to  the 


Bk.  II  The  Tariff -Weapon  loi 

lawyers,  the  latter  simply  continue  negotiations  with  great  industry 
activity,  and  dexterity,  piling  up  taxes  in  order  to  take  them  off  again 
in  an  inexhaustible  series,  and  the  process  perpe'Uates  itself  indefinitely. 

There  are  three  courses  open  to  the  shoemaker:  (i)  He  may  break 
off  negotiations  and  decline  to  buy  arythfiig  frjoin  thti  baker.  "(2) 
He  may  accept  intermediate  conditions,  drawn  up  by  the  lawyers.  (3) 
He  may  dismisss  the  lawyers  and  buy  what  he  w-ants  where  he  pleases. 

If  he  adopts  the  first  course,  he  inflicts  a  maximum  loss  upon  himself, 
and  very  likely  deprives  himself  of  an  advantageous  market  for  his  owti 
goods  at  the  same  time.  In  other  words,  he  loses  all  the  advantages 
created  by  trade  and  the  division  of  labour.  If  he  adopts  the  second 
course,  he  inflicts  himself  with  a  proportionate  loss,  and  deprives  him- 
self of  some  of  the  best  markets.  If  he  dismisses  the  lawyers  and  buys 
what  and  where  he  pleases,  he  inflicts  himself  mth  no  loss  whatever, 
enjoys  the  best  markets,  and  all  the  advantages  which  the  lawyers 
could  confer,  if  they  took  off  all  his  weapon-taxes  at  once. 

The  perfidious  baker,  however,  may  not  adopt  this  liberal  course; 
but  may,  on  the  contrary,  continue  taxing  the  shoemaker's  goods,  and 
at  the  same  time,  injure  him  by  underselling  in  the  shoemaker's  own 
market,  or  by  intermittent  onslaughts  of  dumped  muffins.  If  the  baker 
cannot  be  induced  to  remove  his  taxes,  in  return  for  the  shoemaker's 
taxes,  the  tariff-w-eapon  is  useless  and  should  be  removed  at  once. 
If  the  shoemaker  attempts  to  meet  any  of  these  difficulties  with  his 
tariff -weapon,  he  will  be  using  it  for  purposes  other  than  those  for  which 
it  was  designed;  it  was  designed,  solely,  to  make  the  baker  take  off 
his  taxes  in  return  for  weapon-taxes;  if  the  baker  will  not  do  this,  the 
shoemaker's  taxes  cannot  accomplish  the  single  aim  of  their  existence, 
and  cease  to  have  any  purpose.  If  they  are  used  to  guard  against 
ordinary  low  prices,  the  shoemaker  is  protecting  industry;  if  he  uses 
them  to  guard  against  intermittent  low  prices,  he  is  taxing  himself  in 
order  to  protect  his  market  from  dumping;  if  he  attempts  to  draw  more 
money  from  the  baker  than  flows  in  the  baker's  direction,  he  will  be 
regulating  the  balance  of  trade,  or  attracting  capital.  If  he  uses  his 
tariff  taxes  to  guard  against  certain  imports,  which  may  affect  this  or 
that  industrial  possibility,  he  will  be  educating  infant  industries  or 
developing  productive  potentiahties;  none  of  which  have  anything  to 
do  with  the  tariff-weapon. 

If  the  baker  will  not  repeal  his  taxes  in  return  for  the  shoemaker's, 
the  tariff-weapon  has  failed  to  produce  the  desired  result,  and  is  merely 


I02 


The  New  Protection  Pt.  I 


injuring  the  shoemaker.  The  import  duty,  imposed  as  an  economic 
weapon  in  this  connexion,  can  never  realize  the  unique  purpose  of  its 
being  until'  it  is  taken  oE.'  No  considerations,  therefore,  which  involvfe 
its  existence  for  any  other  purpose,  apply  to  its  use  as  a  weapon;  such 
considerations  fall  under"  the  various  forms  of  Protection  to  which  they 
belong,  and  should  be  discussed  in  relation  to  these. 

The  tariff-weapon,  as  such,  is  a  self-inflicted  injury,  having  no  object 
other  than  its  removal  in  return  for  industrial  concessions.  If  these 
concessions  can  be  obtained,  the  weapon-tax  should  be  taken  off  in  ex- 
change for  them,  as  soon  as  possible;  if  they  cannot  be  obtained,  the 
weapon-tax  should  be  taken  off,  as  soon  as  possible;  there  is  nothing 
gained  in  keeping  it  on  in  either  event.  On  the  contrary,  everything  is 
to  be  gained  in  taking  it  off  in  either  event;  it  was  designed  to  be  taken 
off,  and  can  have  no  other  object;  the  sooner  it  is  taken  off,  moreover, 
the  sooner  it  fulfils  the  single  purpose  of  its  imposition.  If  it  is  permitted 
to  stay  on,  it  destroys  its  own  object  and  becomes  a  protective  tax  in 
some  form  or  other,  and,  in  consequence,  useless  as  a  weapon.  If,  then, 
to  return  to  the  illustration,  the  baker  refuses  to  remove  his  taxes, 
the  tariff- weapon  is  a  demonstrated  futility;  and,  if  the  shoemaker 
continues  to  tax  himself  with  it,  he  is  simply  inflicting  himself  with  a 
useless  burden. 

There  are  other  considerations  with  reference  to  the  use  of  the  taxing 
powers  of  a  nation  as  a  weapon.  If  a  nation,  wedded  to  the  theories 
of  Protection,  as  all  nations  are,  with  but  a  possible  single  exception, 
decides  to  make  us  of  its  tariff  taxes  in  this  way,  it  is  evident  that  the 
protective  functions  of  the  tax  schedules  must  not  be  affected  by  their 
diplomatic  qualifications.  The  protective  taxes  can  no  more  be  used  as 
weapons  than  as  providers  of  revenue.  The  protective  tariff  implies 
the  imposition  of  taxes;  the  tariff- weapon,  however,  can  be  effective 
but  in  their  removal  —  it  is  the  reduction  alone  of  such  taxes,  in  return 
for  other  reductions,  which  lends  any  excuse  to  this  form  of  taxation. 
But,  in  order  to  be  repealed,  weapon-taxes  must  first  be  imposed; 
what,  then,  must  be  the  result  in  the  imposition  of  taxes  to  be  used 
as  weapons?  Upon  revenue  and  protective  duties  will  become  en- 
grafted a  third  form  of  taxation,  super-imposed  upon  the  other  two. 
The  policy  suggesting  itself  in  this  connexion,  to  a  commission  empowered 
to  arrange  a  schedule  of  duties  for  a  protectionist  country,  may  easily  be 
imagined.  The  capitalist's  interests  will  doubtless  have  suggested  to 
the  commission  that  certain  duties  are  essential  for  the  protection  of  the 


Bk.  II  The  Tariff-Weapon  103 

industrial  classes.  Labour  is  generally  willing  to  vote  for  such  taxes,  as 
it  is  led  to  suppose  that  it  is  taxing  the  pauper  foreigner.  These  pro- 
tective taxes  are,  therefore,  necessary,  and  must  be  imposed  over  and 
above  those  essential  for  revenue.  The  far-seeing  statesmen  who 
compose  the  Tariff  Commission  will  perceive,  however,  that  this  already 
formidable  array  of  taxes  should  be  raised  still  higher,  in  order  to  arm 
the  people  by  adding  weapon-taxes  to  existing  revenue  and  protective 
duties;  in  this  way  alone  could  such  taxes  be  reduced  without  interfering 
with  the  revenue  and  protective  functions  of  the  schedules.  These 
weapon-taxes,  therefore,  must  be  added  to  other  taxes,  and  essential 
neither  for  revenue  nor  Protection.  A  nation,  effectively  armed  with 
the  tariff-weapon,  necessarily  evolves  three  distinct  and  mutually 
subversive  systems  of  indirect  taxation,  which  have  to  be  built  one  upon 
another  in  order  to  produce  any  practical  results.  The  revenue  taxes 
will  be  the  foundation  of  the  structure,  and  must  not  be  high  enough  to 
protect  to  any  extent  or  they  will  cease  to  produce  revenue;  the  pro- 
tective taxes  will  come  next,  and  must  be  too  high  to  produce  any  amount 
of  revenue,  or  they  will  cease  to  protect.  The  weapon-taxes  must  then 
be  added  to  these,  and  put  up  so  high  that  they  can  be  reduced  or 
repealed  without  interfering  with  the  functions  of  the  other  two.  It  is 
thus  easy  to  conceive  the  policy  which  must  dominate  a  Commission  em- 
powered to  negotiate  a  treaty  with  these  weapon-taxes.  The  question 
the  Commission  has  to  decide  is,  what  taxes  may  be  removed  in  return 
for  the  removal  of  other  taxes. 

It  may  be  assumed  that  the  capitalist's  interests  have  either  been 
consulted,  or  have  intimated  to  the  commission  that  such  and  such 
taxes  might  be  advantageously  modified  for  the  protection  and  best 
interests  of  labour.  The  people  at  large  will  invariably  be  represented 
in  the  removal  of  such  weapon- taxes  by  organized  capital;  this  is  un- 
avoidable where  a  single  protective  tax  exists.  As  it  is  not  unnaturally 
assumed  that  these  interests  are  identical,  such  negotiations  can  have 
but  one  result:  the  shifting  of  the  incidence  of  unnecessary  taxation 
at  the  dictation  of  capital.  No  other  result  could  be  achieved,  for  no 
other  result  is  attempted;  those  possessed  of  political  influence  sufficient 
to  have  such  taxes  modified,  or  removed,  will  profit  thereby.  If  no 
inducements  sufficiently  strong  present  themselves,  the  tariff-weapon 
rests  upon  the  rack;  the  unnecessary  taxes  stay  where  put. 

On  the  other  hand,  unnecessary  additions  to  revenue  and  protective 
taxes  create  vested  interests  where  none  existed;  profits  will  be  swollen 


I04 


The  New  Protection  Pt.  I 


beyond  the  hopes  ot  the  protectionist,  and  security  values  feel  the  influence 
of  the  tariff- weapon.  These  taxes,  imposed  in  order  to  be  removed,  will 
find  in  many  cases  all  the  political  and  financial  interests  in  the  country 
involved  with  their  retention.  They  will  thus  tend  to  become  fixtures, 
with  the  result  that  the  next  Tariff  Commission  will  perceive  the  wisdom 
of  adding  yet  more  weapon-taxes,  in  order  to  arm  the  people  still  more 
effectively.  Such  taxes  are  thus,  sooner  or  later,  involved  with  the 
entire  financial  life  of  the  nation,  and,  if  not  removed  at  a  very  early  stage 
of  their  existence,  become  nothing  more  than  exaggerated  protective  taxa- 
tion. The  following  interviews  ^  show  the  practical  appHcation  of  such 
considerations. 

"Senator  Hopkins  of  Illinois  is  one  of  two  or  three  former  members 
of  the  Ways  and  Means  Committee  who  helped  frame  the  Dingley  law. 
He  is  ready  to  alter  the  schedules  he  helped  to  fix. 

" '  Unless  the  Republicans  revise  the  tariff  now,'  he  said,  *I  am  unable 
to  understand  how  they  can  go  into  the  next  campaign  and  discuss  it. 
When  the  Dingley  law  was  framed  it  was  well  understood  that  many  of 
the  duties  were  placed  higher  than  they  should  have  been,  because  it 
was  expected  they  would  be  lowered  by  reciprocity  treaties.  The 
duties  on  sugar,  paper,  and  steel  were  placed  especially  high.  I  take 
it  that  the  beet  sugar  interest  influences  had  considerable  to  do  with  the 
duties  on  that  commodity.  Since  the  duty  on  paper  was  fixed  the  mills 
have  formed  a  Trust  and  operate  practically  as  one  plant.  There  have 
been  important  industrial  changes  all  over  the  country,  since  the  old 
law  was  passed  which  make  changes  necessary.  The  same  need  of 
protective  duties  does  not  exist  as  in  1897. 

"Representative  McCall  of  Massachusetts  talked  in  the  same  strain. 
'There  are  many  things  in  the  Dingley  law,'  he  said,  'which  we  do  not 
like  to  look  a  man  straight  in  the  eyes  and  defend.  Then,  if  we  do  not 
revise  schedules,  we  must  soon  retire  that  old  Republican  friend  of  ours, 
who  has  been  brought  forward  in  every  stump  speech  of  the  campaign  — 
that  is,  the  argument  that  when  the  tariff  is  to  be  revised  it  should 
be  revised  by  its  friends." 

"Representative  Crumpacker  of  Indiana,  a  defeated  aspirant  for 
Senator  Fairbank's  place,  is  a  pronounced  tariff  revisionist.  He  is 
reported  to-day  as  saying:  'I  am  going  to  urge  the  President  to  call  an 
extra  session,  and  in  the  call  to  request  Congress  to  examine  carefully 
every  schedule  so  that  the  revision  may  be  as  complete  and  thorough 

»  The  Evening  Post,  N.  Y.,  December  s,  1904. 


Bk.  II  The  Tariff-Weapon  105 

as  possible.  If  we  postpone  revision  until  the  Fifty-ninth  Congress  it 
will  never  be  done.' 

"Representative  Burleigh  of  Maine  is  the  only  'stand-patter'  brought 
forward  this  morning.  He  is  entirely  in  accord  with  the  views  expressed 
in  Senator  Hale's  recent  interview  and  declares  that  the  Senator's 
views  meet  with  the  entire  approval  of  the  Maine  people.  They  do 
not  want  the  tariff  question  opened." 

The  statesmen  will  adopt  the  same  principle  of  the  tariff-weapon 
all  along  the  line;  it  may  be  shown  from  the  point  of  view  of  the  manu- 
facturers in  the  following  passage ;! 

"  When  Congress  gave  us  45  per  cent,  we  needing  only  20  per  cent, 
they  gave  us  a  Congressional  permit,  if  not  an  invitation,  to  consolidate, 
form  one  great  trust,  and  advance  our  prices  25  per  cent,  being  the 
difference  between  the  20  per  cent  needed  and  the  45  per  cent  given." 

These  interviews  are  instructive;  and  permit  the  study  of  the  tariff- 
weapon  in  use.  They  may  be  noticed  in  sequence:  The  first  speaker 
presents  the  process  of  imposing  exaggerated  taxes  in  order  that  such 
taxes  may  be  lowered.  It  is  evident  that  other  nations  will  "arm" 
themselves  in  the  same  way,  with  the  result  that  if  the  weapon-taxes 
are  taken  off,  the  nations  find  themselves  where  they  were  in  the  first 
place;  for,  of  course,  neither  will  remove  either  revenue  or  protective 
taxes  in  return  for  mere  "weapon"  concessions.  This  interview  also 
shows  capitalistic  influences  at  work,  imposing  weapon-taxes  as  well  as 
protective  taxes,  and  a  trust  forming  under  the  influences  of  such  taxa- 
tion. It  is,  of  course,  clear  that  these  taxes  enter  into  profits  and 
security  values  the  moment  imposed,  with  the  result  that  they  become 
inflated  protective  taxes,  and  may  never  be  removed. 

The  second  speaker  is  conscious  of  having  assisted  in  imposing" taxes 
which  are  difficult  to  defend. 

The  third  suggests  the  opinion  that  unless  weapon-taxes  are  repealed 
shortly  after  their  imposition,  they  will  never  be  repealed.  In  other 
words,  that  the  tariff-weapon  may  be  practically  useless. 

The  fourth  speaker  is  the  most  interesting  of  all :  here  is  a  statesman 
voicing,  apparently,  a  large  portion  of  the  community,  who  believes  it 
good  policy  to  impose  taxes  on  the  necessaries  of  life,  in  order  to  take 
them  off,  and  then  to  keep  them  on.  The  statesmen  who  put  the  taxes 
on  say  they  did  so  in  order  to  take  them  off;  through  another  statesman, 
the  people  say  they  prefer  to  keep  them  on.     There  thus  seems  reason 

1  H.  E.  Miles  in  American  Industries.     November  15,  1907,  p.  14. 


io6  ,The  New  Protection  Pt.  I 

to  believe  that  the  people,  and  this  type  of  statesmen,  are  bhssfully 
unconscious  of  the  only  advantages  which  weapon-taxes  possess.  The 
people  surrender  the  power  of  taxation  to  their  representatives,  who 
build  up  taxes  in  order  to  take  them  down.  Then  the  people,  and  their 
representatives,  say  that  they  prefer  to  continue  to  pay  the  taxes. 
This  instructive  passage  seems  to  show  one  of  two  things:  either  that 
a  large  portion  of  the  population,  and  some  of  the  statesmen,  are  incap- 
able of  understanding  the  only  object  of  weapon  taxation,  or  that  such 
statesmen  are  unwilling  to  express  such  comprehension,  neither  posi- 
tion lending  much  support  to  the  tariff-weapon. 

These  passages  refer  to  the  Dingley  Bill  of  1907.  The  Payne-Aldrich 
Bill  became  law  in  1909.  In  the  Dingley  schedules  the  increase  of 
taxation,  designed  to  be  repealed,  maybe  studied;  this  is  the  "  weapon  " 
being  raised  with  the  taxes,  so  to  speak.  The  weapon  may  now  be 
expected  to  fall.  It  took  thirteen  years,  much  agitation,  and  many 
broken  promises,  to  make  this  weapon  move  at  all.  It  flashed  in  the 
air  for  thirteen  years,  and  was  finally  dragged  down  to  be  sharpened 
in  1909.  What  was  the  result?  A  single  passage  will  suffice  for  any  one 
who  has  watched  the  history  of  the  Payne-Aldrich  Committee.  Senator 
Bristow  of  Kansas  is  described  as  a  "strong  and  convinced  protectionist." 
He  is  also  interested  in  red  paint.  He  says:^  "We  paint  our  barns  with 
it  in  Kansas.  I  saw  them  putting  up  duties  which  I  believed  would 
affect  its  cost.  I  wanted  to  know  why  —  I  could  find  no  reason  —  no 
proof  that  it  was  necessary.  I  insisted,  and  I  soon  made  up  my  mind 
that  they  had  no  intention  of  considering  the  difference  in  cost  of  pro- 
duction, that  they  sneered  at  the  idea,  that  they  were  simply  intent 
on  giving  their  political  supporters  what  they  wanted.  Moreover, 
they  intended  to  force  us  to  be  a  party  to  the  business.  It  was  the 
most  dishonest  and  corrupt  work  I  have  ever  seen,  and  I  revolted." 
This  is  the  way  the  Dingley  "weapon  "  fell,  after  thirteen  "years  of 
exaggerated  taxation  and  untold  millions  of  waste. 

Nor  does  it  make  any  difference  whether,  through  reciprocity  clauses, 
any  maximum  and  minimum  taxes  are  handed  over  to  President  or 
Tariff  Commission  with  power  to  negotiate  treaties.  Such  taxes  must 
be  useless  for  any  other  purpose;  that  is,  worth  less  as  taxes  than  as 
markets.  The  instant  they  swell  profits  sufficiently,  they  will  appear  in 
the  form  of  party  contributions,  and  the  President  or  Tariff  Commission 
will  never  be  able  to  touch  them.     Thus  a  portion  of  such  taxes  will 

'  The  Tarijff  in  Our  Times.    Tarbell,  p.  30Q. 


Bk.  II  The  Tariff-Weapon  107 

become  fixtures  and  useless  as  weapons,  and  a  portion  will  be  juggled 
up  or  down  in  return  for  analogous  foreign  concessions,  as  capital 
dictates.  A  population  must  pile  up  more  taxes  than  it  can  possibly 
remove,  in  order  to  remove  any  taxes;  in  other  words,  apparently  always 
lose  the  instant  it  begins  to  use  the  tariff-weapon. 

Article  2 — Preference. 

The  tariff-weapon,  studied  in  the  committee  room  and  the  popular 
mind  at  the  same  time,  is  a  strange  thing;  yet  this  is  the  weapon  with 
which  the  people  of  England  are  in\-ited  to  arm  themselves.  It  may 
be  believed  that  the  Tariff  Reform  weapon  of  the  Unionist  party  would 
be  more  skilfully  used  than  that  of  the  Americans;  and,  as  the  wielding 
of  the  weapon  of  the  great  Republic  is  examined,  such  hope  does  not 
seem  extravagant.  Whether  the  people  of  England  as  a  whole,  however, 
would  gain  from  the  imposition  of  such  taxation  may  be  questioned. 
England  can  never  "arm  "  herself  with  this  mysterious  weapon  unless 
she  multiplies  her  indirect  taxes  at  first;  and  she  can  never  gain  any- 
thing from  the  weapon  imless  she  takes  the  taxes  off.  But  the  in- 
stant she  begins  to  tax  herself  for  this  purpose,  she  will  create  vested 
and  protected  interests,  making  it  difi&cult  for  her  to  untax  herself, 
except  in  limited  ways,  under  limited  conditions;  and  certainly  impos- 
sible to  untax  herself  to  the  extent  of  paying  no  protective  or  weapon- 
taxes,  as  at  present.  If  England  ever  places  a  retaliatory  tax  on 
her  schedules,  there  is  reason  to  believe  that  she  will  never  be  able 
to  realize  the  trade  advantages  she  possesses  to-day,  and  that  such 
a  tax  will  sooner  or  later  involve  all  the  evils  and  expense  of  general 
Protection. 

In  protected  countries,  the  tariff-weapon  involves  the  engrafting 
of  removable  taxes  upon  existing  revenue  and  protective  systems. 
In  England,  the  tariff-weapon  requires  the  adoption  of  an  entirely  new 
feature.  Speaking  in  the  House  of  Commons  on  May  28th,  1903, 
Mr.  Chamberlain  said:^  "The  Preference  must  be  given  either  on  raw 
materials  or  on  food,  or  on  both."  Again:  "If  you  are  to  give  a 
preference  to  the  Colonies  —  and  I  don't  say  that  you  are  —  you  must 
put  a  tax  on  food.  I  make  the  honourable  gentleman  opposite  a  present 
of  that."  A  few  years  later,  Mr.  Chamberlain^  is  more  explicit: 
"When  we  return  to  power,"  he  says  in  1906,  "we  bring  our  policy  with 

•  Cf.  Through  Preference  to  Protection.    L.  G.  Chiozza-Money,  p.  32. 

*  Cf.  The  Spedator.  January  joth,   1906. 


io8  The  New  Protection  Pt.  I 

us.  And  my  Lords  and  gentlemen,  with  Fiscal  Reform,  remember,  we 
bring  Preference  also." 

Mr.  Chamberlain  and  his  immediate  following  will,  sooner  or  later, 
disappear  from  the  political  arena;  the  Unionist  party  may  be  dissolved 
or  reorganized  upon  a  number  of  issues,  with  as  many  leaders;  the 
question  of  food  taxation  may  be  obscured  and  confused  with  various 
forms  of  conferences  and  referendums;  but  the  demand  for  taxes 
of  this  nature  will  probably  always  remain  active  and  constant  in 
England,  as  long  as  an  indirect  fiscal  system  exists. 

When  a  tax  is  imposed  upon  foreign  manufactured  goods  in  England, 
the  English  producer  is  protected  in  the  usual  way  in  the  home  market, 
but,  if  a  preferential  system  of  food  and  raw  material  taxation  is  added; 
the  range  of  English  Protection  would  be  indefinitely  extended.  It 
would  be  possible,  as  England  is  a  great  consumer  of  these  materials, 
to  grant  certain  concessions  and  preferences  to  the  Colonies  and  other 
countries,  in  return  for  which  foreign  markets  could  be  opened  to  the 
English  producer.  Thus  a  tax  on  food  could  be  used  to  put  up 
rents  at  home  and  protect  a  market  abroad  at  the  same  time. 

The  preferential  phase  of  the  New  Protection  is  a  significant  feature 
in  England,  and  may  seem  destined  sooner  or  later  to  play  an  important 
part.  The  history  of  party  government  has  long  represented  but  the 
swing  of  the  pendulum  between  modified  Liberal  and  Conservative 
opinion.  The  conventional  thought  is  unable  to  meet  recent  issues, 
and  to-day  a  Liberalism  is  found  which,  but  a  few  years  ago,  would  have 
been  considered  of  the  most  Radical  nature.  This  may  be  expected 
to  cause  a  compensating  Conservative  reaction,  and  there  is  no  policy 
before  the  English  people  to-day  so  well  calculated  to  represent  such  a 
reaction  as  preferential  Tariff  Reform.  The  old  Free  Trade  Man- 
chester school  of  manufacturing  capital  dies  a  natural  death,  approached 
with  the  protective  tax  and  the  preferential  duty  at  the  same  time. 
The  Corn  Laws  protected  the  landlord  and  exposed  the  manufacturer; 
the  New  Protection  unites  them  and  meets  every  demand  of  capital 
wherever  employed.  Foodstuffs  may  be  controlled  in  order  to  raise  rents, 
while  no  difficulty  need  be  caused  in  the  manufacturer's  market,  owing 
to  Protection  and  Preference.  Preferences  and  concessions  may  be 
granted  to  the  Colonies  and  food-producing  nations,  by  means  of  the 
use  of  the  preferential  weapon  in  such  a  way  that,  while  the  home 
population  is  held  in  a  vice,  new  markets  for  manufacturers  could 
be  developed  abroad,  by  screwing  the  vice  this  way  or  that.    The  food 


Bk.  II  The  Tariff-Weapon  109 

could  be  taxed  out  of,  or  into,  the  mouths  of  the  population  of  England 
in  order  to  protect  a  foreign  market.  The  preferential  weapon  of  the 
New  Protection  is  an  effective  conception,  and  it  is  not  strange  that  it 
looms  so  large  on  the  English  political  horizon.  It  seems  difficult  to 
understand  how  it  has  been  so  long  resisted.  It  need  not  be  developed 
at  length,  however,  in  its  relation  to  trade.  In  this  connexion,  it  sug- 
gests a  duplex,  reversible  form  of  protective  taxation,  acting  through  the 
price  of  food  and  raw  materials,  by  means  of  which  rents  may  be  raised, 
and  capital  may  tax  the  home  population  in  order  to  protect  itself 
in  foreign  markets.  The  home  population  is  invited  to  deprive  itself 
of  things  to  eat  in  order  that  the  Imperial  population  may  be  deprived 
of  clothes  to  wear  and  tools  with  which  to  work. 

Section  III — Tariff  Warfare 

Nothing  shows  more  clearly  the  influence  of  capital  over  admin- 
istrative policy  to-day  than  the  custom  of  regarding  a  nation  solely 
in  the  light  of  a  producing  organization.  An  industrial  society  is 
considered  as  a  great  industry  producing  goods  indefinitely  without 
consuming  anything.  Yet  no  industry  can  produce  without  con- 
sumption of  the  raw  materials  of  its  products.  As  this  position  seems 
evident,  it  seems  also  evident  that  no  nation  can  produce  without  con- 
suming the  elements  of  production;  in  other  words,  as  an  industry  must 
consume  in  order  to  produce,  so  an  industrial  society  must  necessarily 
be  composed  of  consuming  and  producing  elements.  The  consuming 
elements  of  a  society,  however,  have  no  place  in  the  philosophy  of 
Protection;  the  productive  elements  alone  are  considered.  This  tendency 
has  gained  such  a  hold  upon  ideas  of  political  economy,  that  it  is  impos- 
sible to  discuss  the  subject  from  any  other  point  of  xiew.  The  works 
of  such  men  as  Mill  and  Adam  Smith  are  either  disregarded,  or  an 
isolated  passage  here  and  there  is  cited,  upon  which  is  reared  a  system 
of  protective  taxes  of  all  kinds.  The  dominant  idea  in  administrative 
methods  is  the  invention  of  means  by  which  the  taxing  powers  of  a 
society  may  be  used  for  the  benefit  of  industrial  organizations;  the 
interests  of  these  organizations  being  confused  wdth  those  of  the  people 
at  large.  The  idea  of  regarding  the  taxing  powers  of  a  society  as  some- 
thing apart  from  the  interests  of  any  class  or  elements  into  which  the 
society  may  be  divided,  in  order  that  all  its  elements  may  be  brought 
to  the  highest  degree  of  productive  efficiency,  through  untaxed 
production  and   consumption  and  untaxed  markets,  is  yet,  if  ever, 


no  The  New  Protection  Pt.  I 

to  dawn  upon  the  political  horizon.  The  following  passage^  serves  as 
illustration. 

"The  new  mercantilism  often  overlooks,  as  every  movement  of  the 
kind  which  is  based  on  popular  cries  is  sure  to  do,  that  these  weapons 
may,  as  often  as  not,  be  used  unskilfully.  And  thus  Russia,  the  United 
States,  and  France,  have  fallen  back  on  an  extravagantly  high  pro- 
tective system.  But  their  action  drives  all  other  states  to  a  certain 
amount  of  tariff  regulation,  if  only  not  to  be  quite  defenseless.  With- 
out such  weapons  we  cannot  expect  to  make  commercial  treaties.  And 
therefore  Professor  Schumacher"  (who  had  read  a  previous  paper)  "has 
been  very  much  to  the  point  in  emphasizing  the  importance  of  negotia- 
tions tariffs  (Verhandlungszollen).  The  man  who  ignores  these  facts 
dwells  in  Cloudcookooland,  and  does  not  descend  to  the  real  earth 
with  its  opposing  interests  and  struggles." 

This  attitude  is,  apparently,  one  from  which  there  is  no  escape,  colour- 
ing as  it  does  all  political  policies.  Other  nations  tax  our  goods,  it  is 
said;  we  are  compelled,  therefore,  to  tax  their  goods;  or  rather  to  tax 
ourselves  in  self-defence,  in  order  to  induce  them  to  remove  their  taxes 
on  our  products.  In  other  words,  other  nations  refuse  our  goods;  it  is, 
therefore,  apparently  to  oiu"  interest  to  refuse  theirs  in  order  to  open 
their  markets.  The  import  duty  is  supposed  to  be  the  only  means  of 
accomplishing  this  end.  This  is  probably  not  the  case,  and  there  is 
reason  to  regard  it,  in  comparison  with  other  methods,  as  cumbersome 
and  extravagant.  A  nation,  for  instance,  might  be  induced  to  remove 
certain  taxes  in  return  for  a  direct  monetary  consideration,  by  means 
of  which  gain  could  be  compared  with  cost,  and  their  relative  values 
understood.  This  is  impossible  in  import  taxation.  Again,  instead 
of  multiplying  import  duties  indefinitely,  without  knowing  what  is 
accomplished  or  how  much  it  costs,  the  war  could  be  carried  on  by  means 
of  flooding  the  home  market  with  cheap  goods,  through  subsidizing 
home  or  other  sources  of  supply.  The  foreigner  could  thus  be  shut 
out  of  the  home  market  as  long  as  desired,  and  injured  as  much  as 
possible,  more  effectively  and  at  less  expense  than  with  import  duties. 
During  the  war,  moreover,  the  people  would  be  enjoying  cheaper  goods 
and  greater  powers  of  production  instead  of  high  prices  and  scarcity. 
If  the  foreign  nation  retaliates  by  shutting  out  more  goods,  a  reply 
may  be  made  with  another  subsidy,  undermining  another  of  its  industries 


«  Professor  Gustav  Schmoller —  "Schriften  des  V veins  JUr  Socialpolilik,  xcviii,  270,  quoted  by  Professor 
Ashley,  The  Tarijf  Problem,  p.  31. 


Bk.  II  The  Tariff-Weapon  iii 

and  flooding  the  home  market  with  domestic  products;  while  all  the 
time  exactly  how  much  the  industrial  warfare  is  costing  in  relation  to 
the  gain  produced  may  be  known. 

This  method  of  direct  fiscal  warfare  may  be  carried  into  the  field  of 
military  operations.  Adam  Smith ^  may  be  cited  in  support  of  the 
position  that  taxes  may  be  advantageously  imposed  with  reference 
to  certain  industries  essential  to  the  defence  of  the  country.  The  New 
Protection,  basing  its  position  upon  modern  conditions,  has  stronger 
reasons  than  Smith  in  support  of  the  same  policy.  England  is  the  most 
vulnerable  country  in  this  connexion,  on  account  of  her  small  area 
and  Free  Trade.  The  New  Protection  asks^  what  Smith  would  have 
said  to  a  state  of  affairs  in  which  the  people  of  England  is  "dependent 
upon  importation  for  more  than  three-quarters  of  its  bread,  and  for 
almost  half  of  it  upon  importation  from  a  country  with  which  we  have 
quite  recently  seemed  on  the  verge  of  war?"  The  threatening  of  the 
steel  and  iron  industries,  by  German  and  American  dumping  in  un- 
protected English  markets,  adds  to  the  dangers  of  the  situation  as  far 
as  these  industries  are  essential  to  the  building  of  ships  and  the  casting 
of  guns;  considerations  which  apply  to  other  countries  as  well  as  to  Eng- 
land in  proportion  to  the  conditions  involved,  and  which  cannot  be 
swept  away  by  purely  economic  arguments.  The  present  political 
system  makes  it  possible  for  a  single  diplomat  or  politician  to  throw  a 
whole  people  into  convulsions  through  ignorant  or  unguarded  utter- 
ances. It  makes  it  easy  for  organized  capital  to  use  the  entire  naval 
and  military  resources  of  a  nation  in  control  of  spheres  of  influence;  to 
develop  wars  with  weaker  nations  in  order  to  keep  a  party  in  power 
or  create  a  demand  for  the  output  of  a  steel  works  and  ammunition 
factory;  and,  consequently,  lends  weight  to  these  considerations  of  the 
New  Protection.  Their  importance  may  be  frankly  admitted.  Here, 
as  in  the  case  of  the  encouragement  of  an  industry  the  problem  has 
nothing  to  do  with  the  end  in  view  but  is  concerned  solely  with  the 
means  suggested. 

Protection, of  course,  presents  the  same  measure  for  arming  a  great 
nation  on  the  verge  of  war  as  that  presented  for  the  training  of  the 
industrial  nursling.  Whatever  end  is  desired,  Protection  has  but 
one  means  to  suggest;  the  ends  may  vary  to  infinity,  the  means  remain 
fixed  and  imchangeable  —  a  tax  on  imports  is  the  one  arrow  in  the 

«  The  Wealth  of  Nations,  Bk.  IV.,  ch.  ii.,  p.  35. 
'  Professor  Ashley,  The  Tarif  Problem,  p.  37. 


112  The  New  Protection  Pt.  1 

protectionist  quiver.  Yet,  it  is  not  essential  for  a  population  to  throw 
itself  into  the  blind  mazes  of  protective  taxation,  in  order  to  develop 
cereal  resources,  build  ships,  or  make  gun  castings  and  magazine  rifles.  If 
it  is  politically  desirable  for  England,  or  any  other  nation,  to  create 
artificial  food  supplies,  this  can  be  done  through  direct  subsidies,  and  the 
people  benefit  by  cheaper  food  at  the  same  time.  All  the  advantages 
of  this  phase  of  the  weapon  of  the  New  Protection  might  be  obtained 
by  a  minimum  price,  by  the  subsidy  of  a  railway  or  shipping  line, 
as  subsidized  for  postal  purposes  to-day.  The  same  means  can 
be  used  to  build  any  number  of  men-o'-war  and  disappearing 
cannon.  It  is  unnecessary  to  tax  the  food  supply  of  a  people, 
or  the  staples  of  its  industry,  to  accomplish  these  results;  they 
can  be  achieved  directly,  and  at  less  expense,  by  means  of  money 
raised  in  legitimate  fiscal  channels,  instead  of  in  the  suppression  of 
industry  and  the  creation  of  artificial  scarcity  of  the  necessaries 
of  life. 

It  may  be  said  that  the  placing  of  public  funds  in  this  way,  at  the 
disposition  of  a  body  of  politicians,  is  a  dangerous  thing  and  must 
lead  to  the  corruption  of  the  body  in  control  of  the  funds.  This  position 
may  be  admitted.  Such  direct  subsidies  would,  in  all  probability, 
develop  a  complicated  network  of  misapplication  and  misappropri- 
ation of  public  money.  It  may,  however,  be  said  at  the  same  time  that 
Protection  of  this  kind,  if  politically  desirable  and  dependent  upon 
direct  subsidies,  must  be  carried  on  more  or  less  under  the  public  eye; 
the  cost  of  the  Protection  and  corruption  can  thus  be  estimated,  rela- 
tively at  least,  in  connexion  with  the  accruing  advantages.  Where 
the  power  of  imposing  indirect  taxes,  however,  is  surrendered  to  the 
same  body  of  corruptible  officials,  the  whole  field  of  irresponsible  Pro- 
tection is  placed  at  their  disposition,  the  harvest  to  be  reaped  is  indefi- 
nitely greater  than  in  any  direct  system,  and  the  cost,  the  corruption, 
the  ofiicials,  and  the  relative  advantages  instantly  disappear  from 
view  and  can  never  be  accurately  traced.  If,  therefore,  it  is  dan- 
gerous and  corrupting  to  place  direct  subsidies  under  the  control  of 
officials,  there  seems  reason  to  believe  that  to  place  the  much  more 
complicated  and  influential  engine  of  the  indirect  taxing  powers  of 
a  nation  under  such  influences  must  be  vastly  more  dangerous  and 
corrupting. 

"With  regard  to  subsistence,"  says  Mill,i  "the  plea  of  the  Pro- 

^  Principles  of  Political  Economy.     Bk.  V.,  ch.  x.,  §  i,  p.  555. 


Bk.  II  The  Tariff- Weapon  113 

tectionists  has  been  so  often  and  so  triumphantly  met,  that  it  requires 
little  notice  here.  That  country  is  the  most  steadily  as  well  as  the 
most  abundantly  supplied  with  food,  which  draws  its  supplies  from 
the  largest  surface.  It  is  ridiculous  to  found  a  general  system, 
of  policy  on  so  improbable  a  danger  as  that  of  being  at  war  with 
all  the  nations  of  the  world  at  once;  or  to  suppose  that,  even  if  in- 
ferior at  sea,  a  whole  country  could  be  blockaded  like  a  town,  or 
that  the  growers  of  food  in  other  countries  would  not  be  as  anxious 
not  to  lose  an  advantageous  market,  as  we  should  be  not  to  be  deprived 
of  their  corn." 

It  may  be  of  interest  to  inquire  to  what  extent  the  foregoing  con- 
siderations, with  reference  to  the  tariff-weapon,  are  justified  by  specific 
cases  and  actual  conditions.  The  following  is  a  brief  analysis  of  the 
tariff  war  between  Germany  and  Russia  in  1893-4: 

"The  statistics  published  by  the  German  Government  show  that 
after  the  outbreak  of  the  tariff  war,  the  German  export  trade  to  Russia 
had  been  partially  paralyzed.  The  exports  of  locomotives  ceased; 
the  export  of  wrought  iron  was  one-third  of  the  average  in  the  preceding 
year,  and  of  cement  less  than  one-half.  And  in  addition  to  the  losses 
of  the  German  exporters  and  manufacturers,  it  became  apparent  that 
a  large  number  of  Germans  lived  by  the  import  and  handling  of  Russian 
products,  and  they  were,  of  course,  severely  affected.  The  railways 
which  are  State  property,  were  run,  on  certain  branches,  at  a  loss. 
German  ships  were  practically  excluded  from  Russian  ports,  and  the 
German  coast  towns,  interested  in  the  carrying  trade,  were  heavy 
sufferers.  .  .  .  With  the  approach  ofwinter  the  situation  became  worse, 
as  the  Baltic  ports  were  closed  by  the  ice.  The  large  trade  in  extra- 
European  goods,  which  had  been  carried  on  through  Germany  was 
crippled.  The  transit  of  raw  cotton  through  Germany  for  the  Russian 
market  was,  in  1893,  only  one-half  what  it  has  been  in  the  preceding 
year.  And  in  addition  to  the  economical  losses,  a  grave  danger  was 
imminent.  There  is  ample  proof  that  the  tariff  war,  as  it  proceeded, 
was  regarded  by  both  responsible  parties  as  likely  to  lead  to  a  state  of 
things  dangerous  for  the  peace  of  Europe."  *  "On  the  other  side," 
continues  Mr.  Ashley:  "Russia  was  suffering  from  the  injury  inflicted 
on  her  agricultural  exports,  particularly  after  the  good  harvest  of  1893. 
The  following  table  shows  the  movements  of  imports  and  exports  between 
the  two  countries  for  the  years  1890  to  1894,  inclusive.    It  will  be  re-, 

'      •  Rtport,  p.  46.    Cited  in  Modem  TariJ  History.    Percy  Ashley,  p.  93- 


114 


The  New  Protection 


Pt.  I 


Russian  Exports 
to  Germany 
Mill.  Roubles 

German  Exports 

to  Russia 

Mill.  Marks 

.       178 
•       193 
.       138 

54 
S8 
38 

•       133 
148 

35 
54 

membered  that  the  acute  struggle  was  in  the  latter  half  of  1893,  and  in 
the  first  two  months  of  1894." 

Year 

1890 
1891 
1892 

1893 
1894 

In  reference  to  the  Franco-Italian  tariff  war,  the  following  may  be 
cited  from  the  same  source ^r  "The  consequences  of  the  war  to  the 
commerce  between  the  two  countries  are  unmistakable.  The  following 
table  shows  the  French  exports  to  Italy  and  the  Italian  exports  to 
France  for  the  five  years  preceding  and  five  years  following  the 
commencement  of  the  war.  It  will  be  remembered  that  practically 
although  the  acute  struggle  v/as  over  by  the  beginning  of  1890,  the 
conflict  continued  to  1899,  since  until  that  year  neither  country  would 
grant  the  other  its  best  terms;  the  table  shows  that  the  trade  never 
recovered  from  the  blow  of  1888.  The  figures  are  million  pounds 
sterling." 


Year 
883 


890 


899 


French  Exports    Italian  Exports 


to  Italy 

to  France 

12.0 

17. 1 

"•3 

147 

"5 

lo-S 

12.4 

12.4 

13.0 

12.3 

6.2 

7.2 

6.7 

5.3 

6.5 

4.9 

5-4 

4-9 

6.7 

53 

6.1 

6.3 

The  total  exports  of  France  to  all  countries  show  an  increase  during 
the  period.  "Italy  sufi'ered  much  more  —  her  total  exports  declined 
considerably.  The  competitors  of  the  two  countries  reaped  the  benefits 
of  the  struggle;  to  the  combatants  themselves  it  brought  only  difficulties 
and  a  great  amount  of  damage." 

Another  passage^  may  be  cited  in  reference  to  the  war  between 
France  and  Switzerland. 

"The  effects  of  the  war  were  severe  on  both  sides.    The  following 


'  p.  33S. 

'  p.  347. 


Bk.  II 


The  Tariff- Weapon 


IIS 


French  Exports 

Swiss  Exports 

to  Switzerland 

to  France 

•     230. s 

lOI  .5 

242.8 

104 

2 

234.8 

103 

4 

227.9 

91 

9 

172.8 

74 

9 

129.9 

66 

6 

163.2 

67 

3 

179.9 

75 

4 

table  gives  (in  million  francs)  the  French  exports  to  Switzerland,  and 
the  Swiss  exports  to  France,  for  the  four  years  preceding  the  war,  and 
the  four  years  after  the  commencement: 

Year 

1889 
1890 
1891 
1892 
1893 
1894 
189s 
1896 

"The  figures  for  1895  show  the  beginning  of  an  improvement,  since  the 
war  only  lasted  for  seven  months  of  that  year;  since  then  the  upward 
movement  has  on  the  whole  continued,  but  up  to  1901  the  trade  between 
the  two  countries  has  not  returned  to  the  level  of  1891."  France 
seems  to  have  been  the  heaviest  loser  in  this  instance,  and  "the  result 
of  the  war  was  so  much  a  victory  for  Switzerland  that  she  secured  some 
preferences  over  other  nations  in  the  French  market,  without  giving 
France  any  such  preference  in  return." 

From  a  study  of  these  figures,  as  well  as  from  general  considerations, 
it  seems  that  loss  swift  and  certain,  must  be  the  result  of  the  wielding 
of  the  tariff-weapon.  In  such  instance  as  that  of  France,  in  the  Franco- 
Italian  war,  where  total  exports  increased  during  the  struggle,  it  is 
natural  to  conclude  that  such  independent  increase  would  have  been 
still  greater,  without  restrictive  taxation,  and  that  real  loss  is  no  less 
expressed  in  the  necessary  falling  off  of  trade  with  the  nation  involved. 
Where,  as  in  the  case  of  Switzerland,  a  nation  gains  certain  concessions 
as  a  result  of  the  war,  it  seems  that  not  only,  after  several  years  of  the 
enjoyment  of  victory,  had  her  exports  not  returned  to  the  point  reached 
before  the  war  began,  but  that  the  natural  gain  possible  without  the 
restrictive  taxation  of  markets  and  industry  had  been  lost  at  the  same 
time.  The  cause  of  this  was  probably  that  found  at  work  in  the  study 
of  the  weapon-taxes  of  the  United  States.  These  taxes,  placed  over 
and  above  protective  and  revenue  taxes,  become  at  once  involved  with 
political  and  capitalistic  interests;  with  the  result  that  they  may  never 
fall  to  the  protective  and  revenue  level  from  which  they  began.  No 
gain,  therefore,  from  the  tariff- weapon  can  apparently  equal  the  loss 
involved. 

The  New  Protection,  after  demonstrating  the  invalidity  of  the  prin- 


ii6  The  New  Protection  Pt.  I 

ciples  of  Adam  Smith,  appHed  to  modern  conditions,  almost  invariably, 
quotes^  a  certain  passage  from  his  works  in  support  of  retaliatory  duties: 
The  passage  in  this  connexion,  together  with  the  attendant  qualifying 
passages  to  which  the  New  Protection  is  oblivious,  may  therefore  be 
cited: 

"The  case  in  which  it  may  sometimes  be  a  matter  of  deliberation," 
says  Smith,2  "how  far  it  is  proper  to  continue  the  free  importation  of 
certain  foreign  goods,  is,  when  some  foreign  nation  restrains  by  high 
duties  or  prohibitions  the  importation  of  our  manufactures  into  their 
country.  Revenge  in  this  case  naturally  dictates  retaliation,  and  that 
we  should  impose  the  like  duties  and  prohibitions  upon  the  importation 
of  some  or  all  of  their  manufactures  into  ours.  Nations,  accordingly, 
seldom  fail  to  retalitate  in  this  manner.  .  .  .  There  may  be  good 
policy  in  retaliations  of  this  kind,  when  there  is  a  probability  that  they 
will  procure  the  repeal  of  the  high  duties  or  prohibitions  complained 
of.  The  recovery  of  a  great  foreign  market  will  generally  more  than 
compensate  the  transitory  inconveniency  of  paying  dearer  during  a 
short  time  for  some  sorts  of  goods.  To  judge  whether  such  retaliations 
are  likely  to  produce  such  an  effect,  does  not,  perhaps,  belong  so  much 
to  the  science  of  a  legislator,  whose  deliberations  ought  to  be  governed  by 
general  principles  which  are  always  the  same,  as  to  the  skill  of  that 
insidious  and  crafty  animal  vulgarly  called  a  statesman  or  politician, 
whose  councils  are  directed  by  the  momentary  fluctuations  of  affairs. 
When  there  is  no  probability  that  any  such  repeal  can  be  procured,  it 
seems  a  bad  method  of  compensating  the  injury  done  to  certain  classes 
of  our  people,  to  do  another  injury  ourselves,  not  only  to  those  classes, 
but  to  almost  all  other  classes  of  them.  When  our  neighbours  prohibit 
some  manufactures  of  ours,  we  generally  prohibit,  not  only  the  same,  for 
that  alone  could  seldom  affect  them  considerably,  but  some  other 
manufacture  of  theirs.  This  may  no  doubt  give  encouragement  to 
some  particular  class  of  workmen  among  ourselves,  and  by  excluding 
some  of  their  rivals,  may  enable  them  to  raise  their  price  in  the  home 
market.  Those  workmen,  however,  who  suffered  by  our  neighbour's 
prohibition  will  not  be  benefited  by  ours.  On  the  contrary,  they  and 
almost  all  the  other  classes  of  our  citizens  will  thereby  be  obliged  to 
pay  dearer  than  before  for  certain  goods.  Every  such  law,  therefore^ 
imposes  a  real  tax  upon  the  whole  country,  not  in  favour  of  that  par- 


»  Cf.  Professor  Ashley.     The  Tariff  Problem,  pp.  28,  32. 
»  The  Wealth  of  Nations.    Bk.  IV.,  ch.  ii.,  p.  40.  et  seq. 


Bk.  II  The  Tariff- Weapon  117 

ticular  class  of  workmen  who  were  injured  by  our  neighbours'  prohi- 
bition, but  of  some  other  class." 

The  tariflf-weapon  of  the  New  Protection,  studied  in  the  light  of 
"  practical"  political  and  financial  conditions,  may  be  found,  as  other 
phases  of  the  new  protective  school,  to  be  a  duplex,  protective  measure 
aimed  at  foreign  markets.  Thus,  the  preferential  taxes  of  the  New 
Protection  tax  the  home  populption  in  order  to  raise  prices  abroad; 
the  tariff-weapon  taxes  of  the  new  era  impose  a  double  system  of 
taxation  upon  the  home  population,  in  order  to  control  prices  at  home 
and  abroad  at  the  same  time,  by  means  of  the  reduction  of  unnecessary 
burdens.  Through  the  action  of  the  tariff-weapon,  not  only  the  im- 
position, but  the  removal,  of  indirect  burdens  may  be  made  the  subject 
of  political  and  capitalistic  manipulation,  with  all  the  advantages  of 
the  process. 

The  tariff-weapon  is  a  double-edged  sword  grasped  by  the  blade,  and 
the  firmer  the  hold  the  deeper  it  sinks  into  the  flesh  of  the  wielder. 

"But  now  let  us  look  a  little  into  this  policy  of  retaliation,"  says  Sir 
Henry  Campbell-Bannerman.^  "It  is,  of  course,  an  obvious  makeshift. 
It  pleases  the  Protectionists.  It  does  not  content  them,  but  they  know 
quite  well  that  if  it  is  adopted,  gradually  —  it  may  be  speedily  —  their 
whole  programme  will  have  to  be  taken.  It  captures  the  selfish  interests 
of  individual  trades  and  of  individual  men;  it  gratifies  the  fighting 
instincts  of  the  nation — and  we  have  not  to  go  far  back  to  see  what  may 
come  when  the  fighting  instinct  of  the  nation  is  aroused.  The  design 
is  to  prevent  unfair  competition  —  the  foreigner  can  undersell  us  in  some 
cases,  owing  to  advantages  of  climate,  of  wages,  of  hours  of  labour,  social 
conditions,  or  high  tariffs,  and  the  proposal  is  that  the  Government 
should  have  power  given  to  it  to  put  on  duties  against  such  cases  —  in 
other  words,  to  gamble  with  the  trade  of  the  country  behind  the  back 
of  Parliament.  .  .  .  Mr.  Balfour's  maxim  is  this:  'Wemustdoto 
other  countries  what  other  countries  do  to  each  other.'  I  am  familiar 
with  another  maxim.  *Do  to  others  as  you  would  that  they  should  do 
to  you.'  ...  On  the  whole,  I  myself  should  fall  back  upon  the 
antiquated  maxim  of  Scripture,  that  it  is  better  to  do  unto  others  as 
we  would  that  they  should  do  unto  us  —  and  that  is  the  doctrine  of 
Free  Trade." 


» Speech  Delivered  at  Bolton,  October  isth,  1903. 


CHAPTER  VI 

IMPERIALISM   AND   PROGRESS 

A  NUMBER  of  the  phases  in  which  the  import  duty  may 
be  presented  under  both  the  Old  and  the  New  Protection 
have  been  examined.  The  list  is,  however,  by  no  means 
exhausted,  and  may  be  extended  through  the  development 
of  considerations  suggested  by  the  headings  of  the  present  chapter. 

In  Germany,  the  works  of  a  number  of  writers:  List,  Wagner,  Olden- 
burgh,  Roscher,  Hildebrandt,  SchmoUer,  Knies,  and  others,  have 
formed  the  basis  of  more  or  less  divergent  schools.  In  England, 
the  New  Protection  develops  a  number  of  different  positions  in  refer- 
ence to  political  protection,  retaliation,  preference,  Colonial  policy, 
Imperial  unity  and  growth  of  Empire.  In  America,  the  older  school 
is  enlarged  and  enriched  by  "  d3mamic  and  progressive  "  considerations. 

As  population  increases,  as  wealth  accumulates  and  manufacturing 
interests  grow  in  productive  power,  a  country  comes  more  and 
more  under  imperialistic  and  progressive  influences.  Its  accumula- 
tions of  capital  seek  new  channels  of  investment,  and  its  more  or 
less  redundant  population,  new  opportunities  for  occupation  and  em- 
ployment. Around  these  causes  forms  a  more  or  less  definite  policy 
of  territorial  and  industrial  growth  and  expansion  of  various  kinds. 
New  fields  of  production  are  sought  by  the  people;  new  markets  for 
their  produce,  and  new  employment  for  their  reserves  of  industrial 
energy  and  capital.  Trade,  it  is  shown,  is  the  great  agent  of  productive 
development,  and  commerce  the  unfailing  source  of  wealth.  It  thus 
becomes  at  once  necessary  and  desirable  to  open  and  protect  new  markets 
abroad  for  manufactures;  a  Colonial  policy  is  suggested  and  maintained, 
and  spheres  of  influences  become  an  important  feature  in  foreign  rela- 
tions. All  these  conditions  may  apparently  be  furthered  by  means  of 
the  regulation  and  control  of  the  productive  elements  involved,  which 
imply  the  imposition  of  taxes  on  imports. 

Many  other  considerations  having  relatively  little  to  do  with  indus- 
trial conditions  may  be  invoked  in  support  of  the  regulation  of  trade 
through  the  import  duty:  the  growing  burden  of  Empire,  necessitating 

ii8 


Bk.  II  Imperialism  and  Progress  119 

supervision  of  the  various  manifestations  of  development,  political  and 
sociological,  as  well  as  economic;  the  need  of  imperial  and  political 
unity  and  of  welding  the  interests  of  a  great  society  into  a  consistent 
whole;  the  danger  of  being  dependent  upon  foreign  sources  of  supply 
in  case  of  international  complications;  causes  brought  into  existence 
in  Europe  through  the  Napoleonic  wars;  the  need  of  the  regulation  and 
adjustment  of  commerce,  in  order  that  a  society  may  pass  from  agri- 
culture to  a  higher  stage,  in  the  harmonious  union  of  industrial  and 
agrarian  production.  The  converse  proposition,  the  need  of  agricultural 
development  under  certain  conditions,  as  a  supplement  to  mercantile 
and  manufacturing  pursuits.  Other  phases  of  the  policy  may  grow 
out  of  Fichte's  conception  of  a  self-centred  and  contained  social  organ- 
ization, in  which  administrative  functions  maintain  a  proper  balance 
between  the  different  productive  elements. 

Again,  it  may  be  said  that  aU  societies,  at  any  given  time,  but  present 
an  ever  varj^ing  phase  of  an  endless  evolution;  no  fixed  principle  is 
therefore  acceptable  with  reference  to  the  changes  of  social  conditions; 
each  problem,  as  it  arises,  requires  solutions  more  or  less  distinct  from 
those  of  earlier  or  later  questions.  Economics  thus  become  of  purely 
practical  or  empirical  interest,  demanding  the  most  expedient  policy 
for  the  movement.  The  intelligent  control  of  the  taxing  resources  of 
the  nation  may,  it  seems,  present  such  a  poHcy  under  certain  conditions. 
No  temporary  expedients,  says  another  school,  but,  on  the  contrary, 
a  constant  and  consistent  endeavour  to  realize  the  highest  possibilities  of 
all  kinds  which  the  society  may  present;  the  taxing  powers  of  the  nation 
should  thus  always  be  used  in  such  a  way  that  undeviating  progress 
may  be  assured. 

Existing  conditions,  as  found  in  any  modern  society,  it  may  be  said, 
are  not  based  upon  general  or  theoretical  conceptions  of  trade  and 
industry;  but,  on  the  contrary,  upon  a  purely  adventitious  social  de- 
velopment, derived  from  an  indefinite  past  and  conditions  over  which 
the  present  organizations  have  had  no  control.  These  organizations 
have  thus  been  developed  through  an  evolutionary  process,  based  upon 
conditions  more  or  less  analogous  to  those  existing;  a  process  in  which  a 
series  of  actual  facts  has  evolved  another  series  of  such  facts;  that 
in  consequence,  these  facts,  together  with  the  industrial  conditions 
involved,  may  present  a  truer  relation  to  the  needs  of  society  as  con- 
stituted in  reality  than  the  generalized  conceptions  of  theoretical  econ- 
omists.   These  conceptions,  it  may  appear,  however  reasonable  and 


I20  The  New  Protection  Ft.  l 

acceptable,  from  a  philosophic  or  academic  point  of  view,  may  fail 
in  sufficient  recognition  of  the  distinction  between  a  rationalized  cos- 
mopolitanism and  the  complicated,  political  and  industrial  relations  of 
reality. 

Other  considerations  may  be  advanced  in  support  of  a  protective 
policy  for  political  and  sociological  ends,  independent  of  economic  result. 
National  and  imperial  homogeneity,  the  diversification  of  industry, 
the  need  of  constantly  approaching  the  highest  possible  degree  of  social 
efficiency  in  all  its  phases;  the  educational  development  of  the  working 
classes;  progress,  intellectual  and  artistic,  as  well  as  political  and  in- 
dustrial; national  prestige,  patriotism;  the  desirability  of  shedding 
the  light  of  civilization  over  an  ever  widening  area  through  the  protection 
and  retention  of  markets  among  less  developed  peoples,  are  some  of 
the  phases  of  Protection  to  be  presented  in  this  aspect  of  the  subject. 

An  examination  of  even  a  portion  of  the  field  shows  that  the  policy 
is  lacking  in  neither  volume  nor  variety  of  considerations  advanced. 
All  considerations,  however,  unite  in  one  unchanging  position:  faith  in 
a  tax  on  imports  to  achieve  any  desired  result. 

An  analysis  of  material  of  this  nature  shows  that  it  may  be  divided 
and  classified  along  the  following  lines:  The  great  bulk  of  protective 
considerations  may  be  grouped  either  with  those  phases  discussed;  or, 
falling  outside  these,  divided  into  two  classes  which  may  be  called  the 
Progressive  and  the  Practical. 

The  Progressive  group  presents  for  the  first  time  the  social  organiza- 
tion as  a  progressive  unit,  suggests  the  idea  of  political  progress  in  its 
wider  aspects,  and,  consequently,  progress  in  general.  Considerations 
of  this  class  are  involved  with  the  use  of  the  import  duty  as  a  fiscal, 
as  well  as  a  protective,  measure.  Discussion  may,  therefore,  be  de- 
ferred until  this  use  has  been  examined. 

The  Practical  group  includes  a  number  of  considerations  of  importance, 
both  fiscal  and  protective,  discussed  later  under  an  examination  of 
practical  conditions.  The  attention  may,  therefore,  here  be  turned  to 
purely  fiscal  systems. 


Part  II 
TAXATION 


BOOK  I 
INDIRECT  TAXATION 

BOOK  II 
DIRECT  TAXATION 


Book  I 

INDIRECT    TAXATION 

CHAPTER  I 
General  Principles  of  Taxation 

THE  revenue  of  a  society  is  derived  from  the  resources  of  its 
constituent  units.    These  resources   may   be   divided   into 
capital  and  revenue,  and  it  seems  clear  that  social  revenue 
can  be  derived  permanently  from  individual  revenue  alone. 
The  first  question  met,  therefore,  with   reference   to  social   revenue 
is:  In  what  does  individual  revenue  consist? 

"The  private  revenue  of  individuals,"  says  Adam  Smith ^  "arises 
ultimately  from  three  different  sources:  rent,  profit,  and  wages. 
Every  tax  must  finally  be  paid  from  some  one  or  other  of  these  three 
different  sorts  of  revenue,  or  from  all  of  them  indifferently." 

That  all  private  revenue  may  be  resolved  into  Rent,  Profits,  and  Wages 
is  a  position  of  no  little  importance,  and  may  be  given  a  moment's 
attention;  this  position  maybe  based  upon  the  following  consideration: 
Private  economic  incomes  are  created  through  exchange;  these  incomes, 
therefore,  depend  upon  the  relative  values,  or  prices,  of  things  exchanged. 
Production  occurs,  however,  through  the  combination  of  three  productive 
factors;  Land,  Capital,  and  Labour.  The  return  to  these  three  factors, 
therefore,  or  Rent,  Profit,  and  Wages,  forms  the  exhangeable  value  or 
price  of  the  commodity  produced.  Price,  in  consequence,  or  all  private 
revenue  from  productive  sources,  is  ultimately  resolvable  into  its  three 
constituent  elements:  Rent,  Profit  and  Wages,  The  subject  is  ex- 
haustively treated  in  The  Wealth  of  Nations.'^  "The  sources  of  in- 
come," says  Mill,^  "are  rent,  profits,  and  wages.  This  includes  every 
sort  of  income,  except  gift  or  plunder."  A  study,  therefore,  of  Taxation 
should  be  an  analysis  of  the  relation  of  the  sources  of  social  revenue 
to  these  three  sources  of  individual  revenue. 

'  The  Wealth  of  Nations,  Bk.  V.,  ch.  ii.,  p.  413. 

«  Bk.  I.,  ch.  vi. 

•  Principles  oj  Political  Economy,  Bk.  V.,  ch.  iii.,  §  1,  p.  496. 

123 


124  Indirect  Taxation  Pt.  II 

The  nearest  approach  to  a  single  universally  acceptable  proposition 
in  reference  to  Taxation  is  contained  in  the  four  principles  drawn  up 
by  Adam  Smith/  which,  as  Mill^  says,  have  become  classical.  They 
may,  therefore,  be  quoted  in  order  to  serve  as  a  standard  of  excellence 
to  which  different  forms  of  taxation  may  be  referred. 

'T,  The  subjects  of  every  state  ought  to  contribute  toward  the 
support  of  the  Government,  as  nearly  as  possible,  in  proportion  to 
their  respective  abilities;  that  is,  in  proportion  to  the  revenue  which 
they  respectively  enjoy  under  the  protection  of  the  state.  The  expense 
of  government  to  the  individuals  of  a  great  nation  is  like  the  expense 
of  management  to  the  joint  tenants  of  a  great  estate,  who  are  all  obliged 
to  contribute  in  proportion  to  their  respective  interests  in  the  estate. 
In  the  observation  or  neglect  of  this  maxim  consists  what  is  called  the 
equality  or  inequality  of  taxation.  Every  tax,  it  must  be  observed 
once  for  all,  which  falls  finally  upon  one  only  of  the  three  sorts.of  revenue 
above-mentioned,  is  necessarily  unequal,  in  so  far  as  it  does  not  affect 
the  other  two.     .    .    . 

"11.  The  tax  which  each  individual  is  bound  to  pay  ought  to  be 
certain,  and  not  arbitrary.  The  time  of  payment,  the  manner  of 
payment,  the  quantity  to  be  paid,  ought  all  to  be  clear  and  plain  to  the 
contributor,  and  to  every  other  person.  Where  it  is  otherwise,  every 
person  subject  to  the  tax  is  put  more  or  less  in  the  power  of  the  tax- 
gatherer,  who  can  either  aggravate  the  tax  upon  any  obnoxious  con- 
tributor, or  extort,  by  the  terror  of  such  aggravation,  some  present 
or  perquisite  to  himself.  The  imcertainty  of  taxation  encourages  the 
insolence  and  favours  the  corruption  of  an  order  of  men  who  are  naturally 
unpopular,  even  where  they  are  neither  insolent  nor  corrupt.  The 
certainty  of  what  each  individual  ought  to  pay  is,  in  taxation,  a  matter 
of  so  great  importance,  that  a  very  considerable  degree  of  inequality, 
it  appears,  I  believe,  from  the  experience  of  all  nations,  is  not  near  so 
great  an  evil  as  a  very  small  degree  of  uncertainty. 

"III.  Every  tax  ought  to  be  levied  at  the  time,  or  in  the  manner, 
in  which  it  is  most  likely  to  be  convenient  for  the  contributor  to  pay 
it.  A  tax  upon  the  rent  of  land  or  of  houses,  payable  at  the  same  term 
at  which  such  rents  are  usually  paid,  is  levied  at  the  time  it  is  most  likely 
to  be  convenient  for  the  contributor  to  pay;  or,  when  he  is  most  likely 
to  have  wherewithal  to  pay.    Taxes  upon  such  consumable  goods  as 

«  The  Wealth  of  Nations,  Bk.  V.,  ch.  ii.,  p.  414. 

•  Principles  oj  Political  Economy,  Bk.  V.,  ch.  ii.,  §  I,  p.  483. 


Bk.  I  General  Principles  of  Taxation  125 

are  articles  of  luxury  are  all  finally  paid  by  the  consumer,  and  generally 
in  the  manner  that  is  very  convenient  for  him.  He  pays  them  by  little 
and  little,  as  he  has  occasion  to  buy  the  goods.  As  he  is  at  liberty,  too, 
either  to  buy,  or  not  to  buy,  as  he  pleases,  it  must  be  his  own  fault  if  he 
ever  suffers  any  considerable  inconvenience  from  such  taxes. 

"IV.  Every  tax  ought  to  be  so  contrived  as  both  to  take  out  and 
to  keep  out  of  the  pockets  of  the  people  as  little  as  possible  over  and 
above  what  it  brings  into  the  public  treasury  of  the  state.  A  tax  may 
either  take  out  or  keep  out  of  the  pockets  of  the  people  a  great  deal 
more  than  it  brings  into  the  public  treasury,  in  the  four  following  ways: 
First,  the  levying  of  it  may  require  a  great  number  of  officers,  whose 
salaries  may  eat  up  the  greater  part  of  the  produce  of  the  tax,  and  whose 
perquisites  may  impose  another  additional  tax  upon  the  people. 
Secondly,  it  may  obstruct  the  industry  of  the  people,  and  discourage 
them  from  applying  to  certain  branches  of  business  which  might  give 
maintenance  and  employment  to  great  multitudes.  While  it  obliges  the 
people  to  pay,  it  may  thus  diminish,  or  perhaps  destroy,  some  of  the  funds 
which  might  enable  them  more  easily  to  do  so.  Thirdly,  by  the  for- 
feitures and  other  penalties  which  those  unfortunate  individuals  incur 
who  attempt  unsuccessfully  to  evade  the  tax,  it  may  frequently  ruin 
them,  and  thereby  put  an  end  to  the  benefit  which  the  community  might 
have  received  from  the  employment  of  their  capitals.  An  injudicious 
tax  offers  a  great  temptation  to  smuggling.  But  the  penalties  of  smuggling 
must  rise  in  proportion  to  the  temptation.  The  law,  contrary  to  all 
the  ordinary  principles  of  justice,  first  creates  the  temptation,  and  then 
punishes  those  who  yield  to  it;  and  it  commonly  enhances  the  punish- 
ment too  in  proportion  to  the  very  circumstances  which  ought  certainly 
to  alleviate  it,  the  temptation  to  commit  the  crime.  Fourthly,  by 
subjecting  the  people  to  the  frequent  visits  and  the  odious  examination 
of  the  tax-gatherers,  it  may  expose  them  to  much  unnecessary  trouble, 
vexation,  and  oppression;  and  though  vexation  is  not,  strictly  speaking, 
expense,  it  is  certainly  equivalent  to  the  expense  at  which  every  man 
would  be  willing  to  redeem  himself  from  it.  It  is  in  some  one  or  other 
of  these  four  different  ways  that  taxes  are  frequently  so  much  more 
burdensome  to  the  people  than  they  are  beneficial  to  the  sovereign." 

Taxes  may  be  so  levied  that  they  are  recoverable  by  the  original 
contributor,  or  fall  directly  on  the  property  upon  which  they  are  assessed. 
The  subject,  therefore,  at  once  falls  into  two  fields — Indirect  and  Direct 
Taxation. 


CHAPTER  II 

THE    TAXATION    OF   CONSUMPTION 

Section  I  —  Advantages  of  Indirect  Taxation.  Section  II  —  Taxing 
the  Foreigner.  Section  III  —  Indirect  Taxation  for  Revenue. 
Section  IV  —  Convenience  and  Security  of  Indirect  Taxation. 
Section  V  —  Expense  of  Indirect  Taxation. 


Section  I — Advantages  of  Indirect  Taxation 

THE  indirect  method  of  deriving  social  revenue  by  means 
of  the  taxation  of  goods  consumed  by  the  society  has  been 
adopted  by  all  nations.  A  policy  of  such  wide  and  con- 
stant application  must  possess  certain  advantages.  These 
are  expressed  clearly  and  authoritatively  in  the  words  of  Prince  Bis- 
marck/ who  says:  "I  declare  myself  as  essentially  favourable  to  the 
raising  of  all  possible  revenue  by  indirect  taxes,  and  I  hold  direct  taxes 
to  be  an  onerous  and  awkward  makeshift.  .  .  .  Indirect  taxes, 
whatever  may  be  said  against  them  theoretically,  are  in  fact  less 
felt.  It  is  difficult  for  the  individual  to  calculate  how  much  he 
pays,  and  how  much  falls  upon  his  neighbours,  but  he  knows  how 
much  income  tax  he  pays.  .  .  .  With  direct  taxes  a  man  is 
not  asked;  Can  you  on  a  pinch  do  without  your  beer;  can  you 
smoke  less;  can  you  use  less  light  (petroleum)  of  an  evening?  No, 
he  must  pay  the  direct  tax  whether  he  has  money  or  not,  whether 
in  debt  or  not;  and  what  is  worse,  distraint  follows,  and  nothing  has 
a  greater  effect  on  a  man's  disposition  than  execution  on  account  of  a 
few  pence  which  cannot  at  the  moment  be  extorted  from  the  one  who 
owes  them." 

The  same  statesman  advocates^  indirect  methods  upon  other  grounds: 
"Indirect  taxes  are  preferable  to  direct  not  merely  because  of  the  ad- 
vantages in  the  mode  of  raising  them,  the  superfluity  of  executions  and 
distraints,  and  the  fact  that  the  taxpayer  fixes  both  the  time  and  meas- 

•  Speech  in  the  Reichstag,  November  22,  1873.  Quoted  by  W.  Harbutt  Dawson,  Protection  in  Germany, 
P-S4- 

»  Speech  of  February  32,  1878.   Ibid  p.  $5- 

126 


Bk.  I  Taxation  of  Consumption  127 

ure  of  his  taxation;  their  great  superiority  is  to  be  sought  in  their 
counterbalancing  effect,  by  virtue  of  which  the  indirect  pressure  of 
taxes  is  distributed,  in  a  manner  varying  according  to  local  circumstances 
and  the  conjunctures  of  trade,  among  all  those  persons  who  are  affected, 
from  the  production  or  import  of  the  object  taxed  to  its  consumption. 
While  direct  taxes,  for  the  most  part  fall  entirely  and  immovable  upon 
those  liable,  who  cannot  transfer  them  to  others,  and  are  often  threatened 
with  distraint,  an  indirect  tax  is  primarily  taken  from  the  one  liable, 
but  he  is  able,  so  far  as  home  products  are  concerned,  to  transfer  the 
tax  he  has  paid  to  the  buyers  of  his  goods,  while  as  for  taxed  articles 
imported  from  abroad  the  producing  country  wholly  or  partially  bears 
the  tax.  Since  the  indirect  tax  is,  as  a  rule,  incorporated  with  the  other 
competing  factors  which  go  to  the  formation  of  price,  as  one  of  the  less 
important  elements  of  a  now  indivisible  whole,  its  burdensome  effect 
upon  the  individual,  not  apparently,  but  to  a  great  measure  actually, 
disappears.  Thus  all  the  advantages  advanced  on  behalf  of  direct 
taxes  can  at  the  most  claim  a  theoretical  value.  In  theory  the  tendency 
to  affect  the  individual  in  proportion  to  his  capacity,  which  lies  at  the 
basis  of  these  taxes,  may  be  estimated  too  high;  the  practical  form  of 
such  taxes  very  seldom  fits  in  with  the  theory.  The  financial  capacity 
of  the  individual  taxpayer  is  not  always  expressed  in  his  income,  apart 
from  the  general  impossibility  of  calculating  that  income  even  approxi- 
mately. Family  position,  health,  and  local  and  other  circumstances, 
which  direct  taxation  disregards  and  must  disregard,  create  the 
greatest  diversity  in  actual  financial  position  even  among  persons  of 
equal  income." 

Another  passage  may  be  cited:  "Those  who  want  to  see  the  electors 
dissatisfied  with  the  Government  will  hold  fast  to  direct  taxes;  those 
who  seek  to  promote  content  in  the  population  will  be  more  for  indirect. 
That  is  the  result  of  practice  and  experience,  and  I  need  not  develop 
the  psychological  reason  for  it.  Whoever  offers  opposition  wants 
to  see  discontent  among  the  people,  and  will  devise  means  to  find  it 
and  to  excite  it,  by  representing  the  Government  as  incapable,  malev- 
olent, and  perhaps  only  as  clumsily." 

It  is  impossible  to  study  Bismark's  speeches  of  this  period  without 
being  impressed  with  the  importance  lent  to  indirect  fiscal  methods 
and  their  practical  superiority,  in  his  mind,  over  other  forms  of 
taxation.  A  study  of  these  considerations,  to  which  the  great 
majority  of  statesmen  would  doubtless  subscribe,  may  permit  the  ad- 


128  Indirect  Taxation  Pt.  II 

vantages  of  indirect  systems  to  be  summarized  under  the  following 
heads: 

I.  Certain  indirect  taxes  may  be  collected  wholly  or  in  part  from 
foreign  sources. 

n.  Indirect  taxation  involves  the  least  friction  in  raising  national 
revenue. 

III.  Taxes  levied  upon  consumption,  forming  a  part  of  the  price 
of  commodiries,  are  paid  by  the  contributor  at  the  most  convenient 
time  or  avoided;  thus  offering  little  difficulty  in  the  supply  of  the  social 
needs,  and,  consequently,  increasing  the  content  and  security  of  the 
population. 

IV.  Indirect  taxes,  owing  to  their  many  advantages,  are  both 
relatively  and  actually  less  felt  and  less  expensive  than  other  methods 
of  raising  revenue. 

These  positions  are  discussed  in  the  order  named. 

Section  II — Taxing  the  Foreigner 

The  opinion  that  it  is  possible  for  a  nation  to  derive  a  certain  amount 
of  revenue  from  other  nations  is  frequently  met  in  economic  discussion. 
Many  passages  from  the  economists  may  be  cited  in  its  support,  and 
many  instances  occur  in  which  price  is  not  affected  proportionately 
to  a  duty.  Mill  presents  an  important  demonstration  of  this  position. 
The  most  direct  method  of  "taxing  the  foreigner"  is  to  levy  a  duty  on 
exports  and  add  the  amount  of  the  duty  to  price;  if  the  foreign  demand 
remains  imchanged,  the  total  duty  may  be  recovered  in  the  foreign 
market,  and  the  entire  tax  has  apparently  been  collected  abroad. 

"By  taxing  exports,"  says  Mill,^  "we  may,  in  certain  circumstances, 
produce  a  division  of  the  advantage  of  the  trade  more  favourable  to 
ourselves.  In  some  cases  we  may  draw  into  our  coffers,  at  the  expense 
of  foreigners,  not  only  the  whole  tax  but  more  than  the  tax:  in  other 
cases,  we  should  gain  exactly  the  tax;  in  others  less  than  the  tax.  In 
this  last  case,  a  part  of  the  tax  is  borne  by  ourselves:  possibly  the 
whole,  possibly  even,  as  we  shall  show,  more  than  the  whole." 

In  reference  to  a  supposed  trade  in  broadcloth  and  linen  between 
England  and  Germany,  Mill  continues  by  way  of  illustration:  "Sup- 
pose that  England  taxes  her  export  of  cloth,  the  tax  not  being  supposed 
high  enough  to  induce  Germany  to  produce  cloth  for  herself.  The 
price  at  which  cloth  can  be  sold  in  Germany  is  augmented  by  the  tax. 

» Principles  of  Political  Economy.     Bk.  V.,  ch.  iv.,  S  6.,  p  SI3' 


Bk.  I  Taxation  of  Consumption  129 

This  will  probably  diminish  the  quantity  consumed.  It  may  diminish 
it  so  much  that,  even  at  the  increased  prices,  there  will  not  be  required 
so  great  a  money  value  as  before.  Or,  it  may  not  diminish  it  at  all, 
or  so  little,  that  in  consequence  of  the  higher  price,  a  greater  money 
value  will  be  purchased  than  before.  In  this  last  case,  England  will 
gain,  at  the  expense  of  Germany,  not  only  the  whole  amount  of  the 
duty,  but  more;  for,  the  money  value  of  her  exports  to  Germany  being 
increased,  while  her  imports  remain  the  same,  money  will  flow  into 
England  from  Germany.  The  price  of  cloth  will  rise  in  England,  and 
consequently  in  Germany;  but  the  price  of  linen  will  fall  in  Germany, 
and  consequently  in  England.  We  shall  export  less  cloth  and  import 
more  linen,  until  the  equilibrium  is  restored.  It  thus  appears  (what  is 
at  first  sight  somewhat  remarkable)  that  by  taxing  her  exports, 
England  would,  in  some  conceivable  circumstances,  not  only  gain  from 
her  foreign  customers  the  whole  amount  of  the  tax,  but  would  also 
get  her  imports  cheaper.  She  would  get  them  cheaper  in  two  ways, 
for  she  would  obtain  them  for  less  money,  and  would  have  more  money 
to  purchase  them  with.  Germany,  on  the  other  hand,  would  suffer 
doubly:  she  would  have  to  pay  for  her  cloth  a  price  increased  not  only 
by  the  duty,  but  by  the  influx  of  money  into  England,  while  the  same 
change  in  the  distribution  of  the  circulating  medium  would  leave  her 
less  money  to  purchase  with." 

This  is  the  most  favourable  case  to  be  presented  with  reference  to 
taxing  the  foreigner.  It  may  be  asked,  however,  whether  this  passage 
will  bear  analysis.  It  certainly  seems  somewhat  remarkable,  as  Mill 
says,  that  a  nation  could  turn  money  from  foreign  sources  into  its 
treasury  by  taxing  its  own  exports.  Were  such  results  possible  in 
reality,  the  extreme  unpopularity  of  the  export  duty  would  be  difficult  to 
understand.  The  question  is:  What  is  the  real  incidence  of  the  tax  in  Mill's 
illustration?  Who  actually  pays  the  export  duty  levied  on  English  cloth? 
The  German  consumer,  in  increased  price,  is  the  answer  Mill  gives  to 
the  question.  But,  it  may  again  be  asked,  why  does  the  German 
consumer  pay  the  increased  price?  But  one  answer  seems  possible: 
He  pays  the  increased  price  because  the  cloth  is  worth  to  him  the  orig- 
inal price  plus  the  amount  of  the  duty.  He  would  have  paid  the 
extra  price,  duty  or  no  duty,  as  demonstrated  by  the  supposed  fact 
that  he  does  pay  it.  If  the  English  exporter  or  producer  had  asked 
the  extra  price,  it  could  have  been  obtained  independently  of  any  duty. 
In    the  case  supposed    the  English   exporter  must  be  regarded  as 


130  Indirect  Taxation  Pt.  II 

unfamiliar  with  the  possibilities  of  the  German  market.  Had  he 
wished  he  could  have  added  the  duty  to  the  price  of  cloth,  and  put  that 
amount  into  his  own  pocket  in  the  form  of  increased  profits,  instead 
of  into  the  English  Treasury  in  the  form  of  an  export  duty.  The 
real  value  of  the  English  goods  in  the  German  market  was  the  first 
price  plus  the  duty,  and  when  the  English  exporter  pays  the  duty  and 
reimburses  himself  in  higher  prices,  he  pays  the  tax  himself  in  reality; 
for  his  cloth  is  worth  the  entire  amount  obtained.  The  fact  that  the 
German  demand  for  cloth  continued  unaffected  by  the  duty,  is  proof 
that  the  real  value  of  the  goods  was  the  increased  price.  When,  there- 
fore, the  English  exporter  sells  his  goods  to  the  German  for  a  certain 
sum,  part  of  which  is  already  paid  away  in  export  taxes,  the  exporter 
is  loser  to  the  extent  of  the  tax;  in  other  words,  pays  it  himself:  the 
German  consumer  simply  paying  what  the  goods  were  worth  to  him 
before,  as  well  as  after,  the  imposition  of  the  duty.  Instances  such  as 
this,  in  which  merchants  are  supposed  to  be  ignorant  of  the  value  of 
their  own  goods,  must  be  rare;  so  exceptional,  in  fact,  as  to  be  beyond 
the  range  of  any  available  or  productive  administrative  policy.  What 
happens  when  a  foreign  market  seems  to  bear  such  a  tax,  is  that  the 
taxing  administration  diverts  the  potential  profits  of  a  certain  trade 
from  the  pockets  of  the  exporter  to  the  public  treasury,  and  the  exporter 
loses  to  that  extent.  The  inconsistency  m  the  illustration  seems  to 
lie  in  the  supposition  that  the  original  price  paid  in  the  German  market 
was  the  real  value  of  the  English  goods,  and  that  the  tax  forced  the 
German  consumer  to  pay  more  than  they  were  worth. 

The  conditions  are  slightly  altered  when  the  German  demand  for 
cloth,  instead  of  remaining  unaffected,  falls  off;  so  that  the  money 
value  of  the  quantity  exported,  in  spite  of  increased  prices,  is  no  greater 
than  at  first.  In  this  instance,  there  is  no  favourable  flow  of  money  as 
before.  "In  this  case,"  says  Mill,  "England  gains  the  duty."  As 
before,  England  will  collect  the  tax,  but  the  tax  is  paid  as  before  and 
for  the  same  reasons,  by  her  own  exporters  in  the  loss  of  possible 
profits.  The  exporter  loses  his  available  profits  and  finds  his  trade 
adversely  affected. 

In  the  third  instance  the  tax  is  so  heavy  that  but  a  portion  of  it  may  be 
regained  in  increased  prices,  while  the  trade  is  adversely  affected  to  an 
extent  still  greater  than  before.  The  exporter  in  this  case  pays  a  part 
of  the  tax  directly,  a  part  indirectly,  as  before,  and  his  trade  suffers 
an  added  loss  from  the  taxes  imposed. 


Bk.  1  Taxation  of  Consumption  131 

These  three  cases  present  the  most  advantages  possible  with  reference 
to  raising  revenue  from  foreign  sources.  On  examination,  however, 
no  such  possibility  seems  to  exist;  and  where  such  an  attempt  apparently 
succeeds,  it  but  results  in  the  exporters  of  the  taxing  nation  losing 
the  profits  they  might  otherwise  have  obtained.  If  it  were  possible 
for  a  nation  to  raise  money  from  foreign  sources  in  this  way,  why  should 
any  tax  be  imposed  other  than  an  export  duty?  Or,  if  export  duties  can 
produce  but  a  part  of  the  revenue,  why  are  such  taxes  so  rare?  The 
answers  to  these  questions  are  not  far  to  seek:  first,  because  other  nations 
cannot  even  seemingly  be  taxed  in  this  way  to  any  appreciable  extent;  and 
second,  because  when  such  taxes  are  apparently  recovered  from  foreign 
sources,  the  exporters  well  know  that  they  are  losing  so  much  profit. 

Duties  of  this  kind  must  be  very  light;  they  can  never  exceed  the 
difiference  between  the  price  of  the  taxing  nation  and  that  of  other 
sources  of  supply,  or  the  trade  will  cease.  Again,  the  tax  can  never 
be  high  enough  to  induce  the  foreigner  to  produce  for  himself;  while 
any  given  population  can  tax  itself  to  any  desired  extent,  it  can  only 
seem  to  "tax  the  foreigner"  in  a  very  slight  degree.  The  tax  may  produce 
only  what  the  possible,  but  unrealized,  profits  of  a  trade  will  allow. 
Again,  the  foreigner  pays  the  price  voluntarily,  and  he  alone  is  judge 
of  the  values  involved;  he  cannot  be  forced  to  pay  the  tax,  he  has  the 
possibilities  of  other  sources  of  supply  and  his  own  production  always 
present;  the  apparent  revenue,  therefore,  is  not  only  slight  but  may 
cease  at  any  moment. 

These  supposed  cases  are  ephemeral,  and  could  occur  but  under 
peculiar  conditions.  Interference  with  natural  commerce  may,  as  Mill 
points  out,  bring  about  very  different  results,  as  little  expected  as 
desired.  He  shows  how  in  certain  circumstances,  the  imposition  of  an 
export  duty  may  cause  the  taxing  nation  not  only  to  pay  the  entire 
amount  of  the  tax,  but  an  additional  sum  to  the  foreigner.  "It  is 
not  an  impossible  supposition,"  he  says,  "that  by  taxing  our  exports 
we  might  not  only  gain  nothing  from  the  foreigner,  the  tax  being  paid 
out  of  our  own  pockets,  but  might  even  compel  our  own  people  to  pay 
a  second  tax  to  the  foreigner."  Such  cases  are  evidently  due  to  the 
trade  being  unable  to  support  the  burden  imposed,  but,  as  they  present 
no  possibility  of  raising  funds  from  foreign  sources,  they  need  not  be 
examined.  They  show,  if  it  is  supposed  that  one  nation  can  tax  another, 
that  the  foreign  nation  can  respond  in  kind,  and  nothing  is  gained  on 
either  side 


132  Indirect  Taxation  Pt.  II 

A  tax  on  exports  leaves  the  home  market  unaffected;  the  manufacturer 
or  exporter  pays  the  tax  and  regains  his  contribution  as  best  he  can  from 
the  foreigner.  The  export  duty  of  this  nature  offers  a  direct  antithesis 
to  the  protective  import  duty;  the  latter  protects  the  home  market  and 
taxes  the  many  for  the  benefit  of  the  few,  while  the  export  duty  taxes 
the  few  for  the  benefit  of  the  many,  and  protects  the  foreign  market. 
It  is  thus  not  remarkable  that  the  export  duty  has  never  been  popular 
with  the  manufacturing  and  legislative  classes,  although  the  most  direct 
and  obvious  means  of  taxing  foreign  nations. 

These  considerations  lead  again  to  the  import  duty.  Distinct  con- 
ditions are  found  in  every  trade;  thus  taxes  on  different  trades  may  cause 
different  results.  The  conditions  of  a  given  trade  might  be  such  that  a 
tax  upon  foreign  goods  would  not  be  entirely  added  to  the  original 
price;  where  this  occurs,  the  difference  between  the  tax  and  the  increased 
price  seems  to  have  been  derived  from  foreign  sources.  This  suggests 
another  method  of  taxing  the  foreigner. 

It  is  shown  by  taxing  imports  in  a  certain  way,  in  specific  trades, 
that  money  may  be  caused  to  flow  into  the  treasury  from  foreign  sources. 
The  authority  of  Mill  may  be  invoked  in  support  of  this  position.  Re- 
ferring to  the  same  trade  as  before  he  says,  "Instead  of  taxing  the  cloth 
which  we  export,  suppose  that  we  tax  the  linen  which  we  import.  The 
duty  which  we  are  now  supposing  must  not  be  what  is  termed  a  pro- 
tecting duty,  that  is,  a  duty  sufl5ciently  high  to  induce  us  to  produce 
the  article  at  home.  If  it  had  this  effect,  it  would  destroy  entirely 
the  trade  both  in  cloth  and  in  linen,  and  both  countries  would  lose 
the  whole  of  the  advantage  which  they  previously  gained  by  exchanging 
those  commodities  with  one  another.  We  suppose  a  duty  which  might 
diminish  the  consumption  of  the  article,  but  which  would  not  prevent 
us  from  continuing  to  import,  as  before,  whatever  linen  we  did  consume. 

"The  equilibrium  of  trade  would  be  disturbed  if  the  imposition  of 
the  tax  diminished,  in  the  slightest  degree,  the  quantity  of  linen  con- 
sumed. For,  as  the  tax  is  levied  at  our  own  custom-house,  the  German 
exporter  only  receives  the  same  price  as  formerly,  though  the  English 
consumer  pays  a  higher  one.  If,  however,  there  be  any  diminution  of 
the  quantity  bought,  although  a  larger  sum  of  money  may  be  actually 
laid  out  on  the  article,  a  smaller  one  will  be  due  from  England  to  Germany: 
this  sum  will  no  longer  be  an  equivalent  for  the  sum  due  from  Germany 
to  England  for  cloth,  the  balance  therefore  must  be  paid  in  money. 
Prices  will  fall  in  Germany  and  rise  in  England;  linen  wUl  fall  in  the 


Bk.  I  Taxation  of  Consumption  133 

German  market;  cloth  will  rise  in  the  English.  The  Germans  will  pay 
a  higher  price  for  cloth,  and  will  have  smaller  money  incomes  to  buy 
it  with;  while  the  English  will  obtain  linen  cheaper,  that  is,  its  price 
will  exceed  what  it  previously  was  by  less  than  the  amount  of  the  duty, 
while  their  means  of  purchasing  it  will  be  increased  by  the  increase  of 
their  money  incomes." 

In  this  case  an  import  duty  is  placed  on  German  linen,  but  the  tax 
must  be  so  nicely  gauged  that  the  relation  between  supply  and  demand 
will  be  affected  in  a  certain  way;  the  total  quantity  consumed  must 
be  less  than  at  first,  although  the  trade  must  not  be  endangered.  If 
the  home  demand  is  unaffected  by  the  duty,  it  is  evident  that  the  entire 
amount  of  the  tax  is  added  to  the  price  and,  as  Mill  says,  "the  whole 
of  the  tax  will  be  paid  out  of  our  own  pockets." 

If  the  total  money  value  of  the  linen  imported  is  equal  to  the  first 
price,  plus  the  duty,  the  English  consumer  pays  the  tax  in  full.  If 
this  told  value  is  decreased  owing  to  diminished  demand,  the  entire  tax 
cannot  be  added  to  the  English  price;  the  taxed  price  of  the  linen  will, 
therefore,  be  equal  to  the  original  price,  plus  an  amount  less  than  the 
duty.  The  difference  between  this  amount  and  the  duty  is  supposed 
to  be  paid  by  the  German  exporter.  Thus,  if  a  certain  quantity  of  linen 
is  originally  worth  one  hundred  shillings,  the  duty  ten  shillings,  and  the 
price  after  the  imposition  of  the  duty  raised  five  shillings,  it  is  supposed 
that  the  two  countries  each  pay  half  the  duty.  This  position  may  be 
questioned.  The  profits  derived  by  the  German  exporter  enable  him 
to  reduce  his  price  by  five  shillings  duty,  and  still  continue  the  trade. 
Before  the  imposition  of  the  duty  he  would  have  been  both  able  and 
willing  to  have  supplied  the  English  market  at  a  reduction  of  five  shil- 
lings; in  other  words,  the  English  consumer  has  been  paying  a  price 
five  shillings  greater  than  necessary.  In  this  case  the  English  consumer 
apparently  pays  five  shillings  out  of  his  pocket  in  taxes,  and  loses  five 
shillings  in  preventing  a  reduction  in  price.  It  thus  seems  that  the 
ten  shillings  in  the  English  treasury  are,  in  reality,  contributed  by 
the  English  consumer:  five  shillings  in  increased  price  and  five  shillings 
in  an  artificially  high  price  sustained  by  the  tax. 

Mill  recognizes  the  fact  that  in  such  cases  it  is  not  the  foreign  pro- 
ducer who  pays  the  tax,  as  is  generally  supposed,  but  believes  it  to 
fall  upon  the  foreign  consumer  of  English  cloth;  his  reason  is  that  a 
flow  of  money,  created  in  England's  favour,  has  raised  the  price  of  her 
exports,  while  at  the  same  time,  diminishing  the  available  money  in 


134  Indirect  Taxation  Pt.  II 

Germany.  Even  if  this  position  is  accepted,  it  seems  that  the 
falling  off  in  money  supply  in  Germany  must  cause  an  exactly 
compensating  decrease  in  demand,  and  it  is  not  easy  to  perceive  how 
decreased  demand  and  diminished  money  supply  could  raise  prices. 
Mill  accounts  for  this  by  the  flow  of  money  to  England  increasing  the 
value  of  exports.  Such  arguments  are  necessarily  of  an  attenuated 
character;  they  may,  however,  be  met  by  compensating  considerations; 
for  if  the  price  of  goods  can  be  raised  abroad  by  means  of  an  import 
duty,  the  price  could  have  been  raised  independently  of  any  duty  on 
foreign  goods;  in  other  words,  the  higher  price  could  have  been  obtained 
for  the  asking;  and  the  argument  drifts  in  a  circle  and  returns  to  con- 
siderations suggested  by  the  export  duty. 

Mill's  considerations  are  complicated  by  the  introduction  of  a  flow 
of  money;  another  illustration  may  be  presented  reducing  the  subject 
to  simpler  terms  through  the  elimination  of  money. 

A  trade  may  be  supposed,  carried  on  between  a  civilized  nation  and 
savages,  the  latter  unfamiliar  with  the  use  of  money;  the  trade  consist- 
ing in  the  exchange  of  ivory  and  firearms  at  a  fixed  ratio.  The  civilized 
nation  decides  to  tax  the  savage.  An  export  duty  is  imposed  upon 
firearms.  The  traders  increase  the  quantity  of  ivory  demanded  from 
the  savage  to  an  equivalent  extent.  If  the  savage  is  willing  to  give  the 
increased  amount  of  ivory,  the  real  incidence  of  the  tax  falls  upon  the 
exporters  of  firearms;  for  they  might  have  added  it  to  their  profits 
without  any  tax.  If  the  savage  will  only  pay  part  of  the  increased 
amount  of  ivory  demanded,  the  exporter  pays  a  part  of  the  tax 
directly  and  the  rest  in  losing  a  possible  gain.  If  no  extra  quantity 
of  ivory  can  be  extracted  from  the  savage,  the  exporter  of  firearms 
pays  the  entire  tax  himself. 

It  may  be  supposed,  however,  that  the  merchants  and  the  traders, 
appreciating  these  facts,  induce  their  government  to  adopt  a  different 
method  of  taxing  the  savage.  They  suggest  an  import  duty  on  ivory, 
instead  of  an  export  duty  on  firearms.  The  savage  is  again  invited 
to  contribute  an  increased  quantity  of  ivory  for  the  same  firearms. 
As  before,  three  courses  are  open  to  him;  he  may  decline  to  pay  any 
portion  of  the  extra  price;  in  other  words,  the  home  demand  for  ivory 
is  unaffected  and  the  home  consumer  pays  the  entire  duty  in  increased 
prices.  Again,  the  savage  may  consent  to  pay  a  part  of  the  extra 
amount;  that  is,  the  home  demand  fall  off  relatively,  and  the  home  con- 
sumer pays  a  part  of  the  tax  in  augmented  prices  and  the  remainder 


Bk.  I  Taxation  of  Consumption  135 

in  forcing  the  price  beyond  that  which  the  savage  was  ready  to  meet; 
in  this  case,  it  is  usually  supposed  that  the  savage  pays  a  part  of  the 
tax.  Again,  the  savage  may  consent  to  give  the  entire  extra  amount  of 
ivory  demanded;  in  this  case  the  tax  is  collected  in  full  by  the  govern- 
ment, but  the  price  is  not  increased  to  the  home  consumer.  In  this 
instance,  it  is  assumed  that  the  savage  has  paid  the  entire  amount  of 
the  tax.  In  such  a  case  the  home  consumer  has  lost  the  possibility  of 
the  price  reaching  its  normal  level;  which  as  events  have  shown,  is  the 
original  price  less  the  duty.  If  such  an  instance  could  occur  in  reality, 
owing  to  ignorance  of  the  possibilities  of  any  given  trade,  the  home 
consumer  is  paying  an  artificially  forced  price,  and  the  real  incidence  of 
the  tax  falls  upon  him,  even  in  this  exceptional  case,  as  it  apparently 
does  in  all  others. 

The  subject  may  be  further  simplified  by  supposing  the  goods  con- 
tributed by  the  savage  to  be  gold  instead  of  ivory.  All  the  taxes  can 
do,  in  whatever  form  imposed,  is  to  extract  a  greater  quantity  of  gold 
from  the  savage.  If  the  quantity  is  increased,  it  is  evident  that  the 
producers  or  consumers  of  the  taxing  nation  bear  their  real  incidence 
through  the  loss  of  the  gold  they  might  have  put  in  their  own  pockets 
without  any  taxes;  for,  in  any  normal  trade,  it  is  impossible  to  force 
the  savage  to  pay  more  than  he  is  willing  to  pay,  and  natural  condi- 
tions, not  taxes,  fix  the  amount.  If  the  quantity  of  gold  obtained 
is  not  increased,  the  savage  is  untaxed  in  any  way.  How  unnecessary 
is  the  introduction  of  a  balance  of  trade  and  a  flow  of  money  in 
the  study  of  international  trade  relations  is  shown  by  the  fact  that 
the  goods  of  the  savage  might  be  gold  and  ivory  combined,  without 
altering  conditions.  But  gold  and  ivory  combined  are  typical  of  general 
international  exchange;  gold  bullion  being  the  form  in  which  money 
circulates  in  such  exchange. 

These  considerations  are  apparently  unaffected  by  an  import  duty 
levied  upon  goods  held  in  bond  for  export,  having,  therefore,  no  home 
market.  In  such  circumstances,  the  price  to  the  home  consumer 
cannot  be  affected,  the  duty  is  added  by  the  exporter  to  the  foreign 
price.  An  import  duty  levied  upon  goods  held  for  export  is  analogous 
to  an  export  duty;  and  to  urge  it  as  a  means  of  taxing  the  foreigner 
is  to  complete  the  circle  of  investigation  and  to  return  to  considerations 
suggested  by  an  export  duty. 

All  methods  devised  for  taxing  the  foreigner,  that  is,  all  taxes  levied 
upon  goods  in  such  way  that  price  is  not  proportionately  increased 


136  Indirect  Taxation  Pt.  II 

are  the  taxation  of  the  unrealized  possibilities  of  trade;  either  the  profits 
of  the  home  producer,  or  the  expenses  of  the  home  consumer.  It  seems, 
therefore,  that  such  taxes  are  necessarily  ephemeral;  even  the  appearance 
of  taxing  the  foreigner  can  never  be  of  importance.  A  system  of  revenue, 
based  upon  the  ignorance  of  traders  of  the  potentialities  of  their  own 
trade,  offers  no  secure  or  enduring  foundation. 

There  are  other  reasons  why  such  attempts  to  tax  foreign  nations 
are  futile.  As  such  taxes  can  be  levied  but  upon  trade  with  any  given 
n,ation,  it  is  obviously  open  to  the  foreign  nation  to  tax  goods  in  exactly 
the  same  way;  thus  rendering  abortive  any  even  apparent  advantage. 
As  Mill  says,^  "If  England,  in  the  case  already  supposed,  sought  to 
obtain  for  herself  more  than  her  natural  share  of  the  advantage  of  the 
trade  with  Germany  by  imposing  a  duty  upon  linen,  Germany  would 
only  have  to  impose  a  duty  upon  cloth,  suSicient  to  diminish  the  demand 
for  that  article  about  as  much  as  the  demand  for  linen  had  been  dimin- 
ished in  England  by  the  tax.  Things  would  then  be  as  before,  and 
each  country  would  pay  its  own  tax.  Unless,  indeed,  the  sum  of  the 
two  duties  exceeded  the  entire  advantage  of  the  trade;  for  in  that 
case  the  trade,  and  its  advantage,  would  cease  entirely." 

Section  III — Indirect  Taxation  for  Revenue 
Article  i — General  Considerations. 

As  methods  of  taxing  the  foreigner  can  never  be  productive  or 
lasting,  and  as  the  expenses  of  society  must  be  met,  the  attention  turns 
to  other  means  of  providing  revenue.  The  import  duty  again  appears 
and  at  last  becomes  a  tax  levied  for  fiscal  purposes  alone,  and  as 
such  is  merged  in  the  wider  influences  of  a  tax  on  consumption  in 
general;  including  the  various  forms  of  excise.  Here  for  the  first  time 
occurs  the  conception  of  a  tax  as  a  tax;  attention  up  to  the  present 
has  been  occupied  with  conceptions  invented  for  the  use  of  the  taxing 
powers  of  a  society  for  something  other  than  that  for  which  these  powers 
naturally  seem  intended  —  the  production  of  revenue. 

Indirect  taxation  of  whatever  nature,  whether  upon  foreign  goods 
in  the  form  of  an  import  duty,  or  upon  domestic  goods  as  excise,  offers 
great  advantages  to  an  administration,  and  is  not  without  apparent 
advantage  to  a  people.  The  advantages  to  the  people  are,  for  the  most 
part,  of  a  negative  character,  consisting  largely  in  the  fact  that  it  is 

» PrincipUi  0}  Political  Economy.    Bk.  V.,  ch.  iv.,  i  6,  p.  516.. 


Bk.  I  Taxation  of  Consumption  137 

impossible  to  estimate  the  amount  of  their  fiscal  burdens  or  their  ulti- 
mate effects.  It  is  again  supposed  that  these  taxes  are  either  paid 
at  the  most  convenient  time  or  avoided.  Taxes  thus  absorbed  in 
price  have,  for  these  reasons,  always  possessed  a  certain  popularity 
even  among  those  upon  whom  they  bear  most  heavily. 

The  advantages  of  indirect  methods  from  the  administrative  point 
of  view  are  evident.  In  the  majority  of  cases  they  offer  the  admin- 
istration an  easy  and  certain  form  of  collection;  they  keep  the  people 
in  ignorance  of  the  amount  they  are  taxed;  they  permit  a  thousand 
uses  of  the  taxing  powers  having  nothing  to  do  with  revenue  and  re- 
dovmding  to  the  advantage  of  politician  or  capitalist;  they  render  a 
government  largely  independent  of  the  suffrage  of  the  people  and 
permit  an  unpopular  administration  to  support  itself  with  ease,  where 
no  direct  taxes  might  be  collected.  Such  advantages  are  too 
great  to  be  ignored  and  governments  have  shown  no  tendency  to  ignore 
them;  the  result  is  that  a  large  portion  of  the  expenses  of  social  organ- 
ization is  met  to-day  by  means  of  taxes  on  consumption  and  industry 
in  some  form  or  other.  Taxes  of  this  nature  form  what  is  supposed  to 
be  an  approximate  method  of  taxing  incomes;  the  expenses  of  an  in- 
dividual naturally  bear  some  relation  to  his  possessions;  and  the  taxing 
of  his  consumption  seems  to  place  a  more  or  less  proportionate  tax 
upon  his  revenue.  For  purposes  of  taxation,  commodities  are  divided 
into  luxuries  and  necessities.  These  two  classes  include  different  ob- 
jects for  fiscal  attention;  taxes  levied  upon  one  or  the  other  producing 
different  results,  both  in  the  revenue  derived  and  their  effects  upon 
society. 

Article  2 — Luxuries. 

Taxes  levied  upon  luxuries  present,  to  a  certain  extent,  the  advantages 
mentioned  with  reference  to  indirect  methods.  On  the  other  hand,  as 
Adam  Smith ^  says,  "Such  taxes,  in  proportion  to  what  they  bring  into 
the  public  treasury  of  the  State,  always  take  out  and  keep  out  of  the 
pockets  of  the  people  more  than  almost  any  other  taxes.  They  seem 
to  do  this  in  all  the  four  different  ways  in  which  it  is  possible  to  do  it." 
The  four  ways  are:  (i)  the  great  expense  in  elaborate  customs  and 
revenue  administration  required;  (2)  the  discouragement  to  industry 
when  voluntary  consumption  is  concerned;  (3)  corrupting  practices; 
(4)    the  necessary  annoyance  and  complicated  supervision.    As  taxes 

«  Th«  Wealth  of  Nations.    Bk.  V.,  ch.  ii.,  p.  494. 


138  Indirect  Taxation  Pt.  II 

of  this  kind,  are  practically  voluntary,  they  are  subject  to  much  varia- 
tion, both  in  the  amount  of  revenue  produced  and  in  the  proportion 
of  total  revenue  created.  They  are  thus  open  to  two  objections  from 
the  administrative  point  of  view,  the  most  serious  found  in  a  tax; 
those  of  variation  in  amount,  and  uncertainty  in  produce.  Expensive, 
variable,  and  imcertain,  such  taxes  offer  a  correspondingly  unsatis- 
factory basis  for  revenue. 

Article  3 — Necessaries. 

Taxes  on  necessaries,  from  an  administrative  attitude,  are  greatly 
preferable  to  those  upon  luxuries.  The  necessaries  of  existence,  vital 
and  industrial,  must  be  consumed  by  the  entire  people;  such  commodities 
will,  therefore,  form  a  vastly  greater  bulk  than  luxuries.  In  price, 
also,  necessaries  present  important  advantages;  as  they  are  cheaper, 
they  support  a  higher  rate  of  taxation,  and  thus  produce,  actually  and 
relatively,  a  larger  revenue  than  taxes  upon  higher-priced  goods.  This 
revenue,  again,  will  be  more  constant,  as  the  consumption  of  necessaries 
varies  within  narrow  limits,  and  can  never  cease  altogether.  The 
taxation  of  the  staples  of  life  and  industry  thus  becomes  the  most  con- 
stant source  of  revenue  derived  from  indirect  methods,  and  as  such,  the 
most  important  of  modern  fiscal  systems. 

The  foregoing  considerations  are  advanced  from  an  administrative 
point  of  view.  There  is  another  point  of  view,  however,  from  which  a 
fiscal  system  may  be  studied:  that  which  regards  a  society,  as  a  whole. 
Looked  at  in  this  light,  the  indirect  taxation  of  necessaries  presents  a 
different  field  for  analysis  and  different  considerations.  The  first 
of  these  is  the  fact  that  such  taxes  must  bear  much  more  heavily  upon 
the  poor  than  upon  the  rich,  and  thus  form  a  proportionately  unjust 
and  imsatisfactory  source  of  revenue,  irrespective  of  temporary  advan- 
tages. The  taxation  of  vital  needs  places  a  sure  and  easy  method  of 
raising  revenue  in  the  hands  of  an  administration,  independent  of  the 
suffrage  of  the  mass  of  the  population,  and  may  thus  seem  to  lend  per- 
manence and  stability  to  the  society.  On  the  other  hand  a  fiscal  system 
bearing  more  heavily  upon  one  class  than  upon  another,  and  that  class 
always  the  more  numerous,  must  lay  the  foundation  for  political  dis- 
turbance, revolt,  and  final  revolution;  the  very  ease  with  which  an 
administration  may  support  itself  through  indirect  channels  increases 
the  ultimate  difficulties  of  the  social  organization.  The  following  con- 
giderations  serve  as  illustration : 


Bk/ 1  Taxation  of  Consumption  139 

It  is  evident  that  a  much  greater  proportion  of  the  revenue  of  the 
poor  is  spent  on  the  actual  requirements  of  life  and  industry  than 
of  the  incomes  of  the  well-to-do.  Three  fourths,  or  all  the  income 
of  the  very  poor  man,  may  be  spent  upon  the  essential  needs  ot 
existence,  and  all  the  income  so  spent  falls  under  the  influence  of  taxes 
on  necessaries.  On  the  other  hand,  such  taxes  will  absorb  a  much 
smaller  proportion  of  the  income  of  the  richer  classes.  A  man  with 
£50  a  year  in  wages  will  be  forced  to  spend  nearly  100  per  cent  of 
his  total  revenue  upon  necessaries.  If  these  necessaries  are  taxed, 
100  per  cent  of  his  income  falls  under  contribution.  If  the  increased 
prices  caused  by  taxation  amount  to  £5,  he  wiU  pay  that  amount  or 
10  per  cent  of  his  income  in  taxes.  On  the  other  hand,  it  is  possible 
that  a  man  in  receipt  of  £50,000  income,  might  not  expend  £5,000  a 
year  in  the  purchase  of  the  commoner  needs  of  the  people;  in  which 
case,  instead  of  100  per  cent  of  his  income  being  taxed,  only  one 
tenth  part  of  it  would  contribute  to  the  public  treasury,  and  thus 
instead  of  paying  10  per  cent  of  his  inome  to  the  state,  but  one  tenth 
of  his  income  would  be  taxed  and  he  would  contribute  but  one  tenth  of 
10  per  cent,  or  one  one-hundredth  of  his  greater  resources.  The  poor 
man  will  thus  be  taxed,  ten  times  as  heavily,  proportionately,  as  the 
rich  man. 

This  form  of  taxation,  in  which  contribution  is  levied  upon  the 
necessaries  of  life,  is  universal  to-day,  and  forms  what  might  be  called, 
approximately,  an  inversely  progressive  income  tax;  that  is,  a  tax 
increasing  as  a  man's  poverty,  and  decreasing  relatively  to  his  wealth. 
The  smaller  the  income,  the  greater  the  proportion  of  taxation  it  is 
forced  to  pay;  the  larger  the  income,  the  greater  the  proportion  it  may 
escape.  If  indirect  taxes  on  necessaries  were  assessed  directly,  their 
effects  upon  the  two  incomes  considered  would  be  as  follows:  On 
assessment  day  the  poor  man,  in  all  probability,  would  be  compelled 
to  produce  his  entire  £50  of  income,  10  per  cent  of  v/hich  would  be 
taken  in  taxes.  The  rich  man,  on  the  contrary,  would  be  required  to 
produce  that  portion  alone  of  his  resources  spent  upon  necessaries;  in 
the  case  supposed,  he  would  be  taxed  but  on  £5,000,  leaving  £45,000, 
or  90  per  cent  of  his  income  untouched.  The  disproportion  of 
the  burden  thus  placed  upon  the  two  incomes  is  evident;  yet  this 
disproportion  seems  to  be  the  least  important  of  the  results  produced  in 
any  society  supported  by  the  indirect  taxation  of  necessary  living 
expenses. 


140  Indirect  Taxation  Pt.  II 

Where  loo  per  cent  of  one  income  is  taxed,  and  but  lo  per  cent 
of  another,  the  larger,  or  least  taxed  income,  possesses  an  untaxed 
reserve,  or  saving  capacity,  of  which  the  smaller,  or  most  taxed  incomes, 
are  deprived.  Thus,  an  income  of  £50,000,  taxed  upon  £5,000  alone, 
might  easily  save  £10,000  a  year  out  of  the  total  income;  while  an 
income  of  £50,  taxed  on  100  per  cent  of  its  amount,  could  save  nothing 
or  a  disproportionate  percentage.  In  the  second  year  of  the  action  of 
such  taxes,  the  first  income  will  have  added  10  per  cent  to  its  capital, 
that  is,  the  income,  increased  by  10  per  cent,  will  be  taxed  upon  a 
smaller  scale  and  possess  a  greater  power  of  accumulation;  the 
smaller  income,  saving  nothing  and  still  taxed  upon  100  per  cent  of 
its  amount.  Where  a  society  raises  its  revenue,  wholly  or  in  part, 
therefore,  by  means  of  the  indirect  taxation  of  necessaries,  a  process 
of  accumulation  sets  in  toward  the  larger  or  least  taxed  incomes.  In 
other  words,  the  larger  incomes  will  possess  a  progressively  increasing 
and  untaxed  accumulating  power  in  proportion  to  the  wealth  repre- 
sented, while  smaller  incomes  will  be  denied  such  an  untaxed  reserve  in 
proportion  to  the  poverty  involved.  The  greater  the  income,  therefore, 
the  greater  will  be  its  power  of  accumulation  in  reference  to  taxation; 
the  smaller  the  income,  the  less  the  possibility  of  creating  a  reserve 
untaxed  through  living  expenses.  This  process  carried  on  generation 
after  generation,  throughout  the  entire  series  of  the  incomes  of  a 
society,  can  produce  but  one  result:  the  distortion  of  the  distribution 
of  the  annual  wealth  of  the  society  in  such  a  way  that  the  larger  incomes 
will  absorb  a  constantly  increasing  proportion,  while  the  smaller  in- 
comes will  be  brought  under  an  increasing  process  of  taxation.  When 
it  is  realized,  in  addition,  that  the  action  of  taxation  enforced  through 
living  expenses  may  be  greatly  modified  under  specific  conditions, 
the  effects  of  the  disparity  of  burden  become  more  marked. 

The  forced  action  of  such  taxes,  with  reference  to  the  two  incomes 
considered,  would  be  as  follows:  the  man  with  £50  a  year  is  forced 
to  pay  £5  in  taxes,  the  man  with  £50,000,  however,  is  not  forced  to  pay 
any  more;  thus  the  forced  burden  upon  the  smaller  income  is  one  tenth 
part  of  its  total,  while  the  forced  burden  upon  the  larger  income  is 
one  ten-thousandth  part  of  its  greater  amount.  The  forced  effects 
of  such  methods,  however,  do  not  end  here;  for  by  means  of  the  pro- 
tective theory,  the  "balance  of  trade,"  ''infant  industries,"  the 
"  pauper-labour,"  the  ''attraction  of  capital,"  "weapon-taxes,"  and  so 
on,  an  increased  burden  of  taxation  may  be  piled  cumulatively  upon  the 


Bk.  I  Taxation  of  Consumption  141 

smaller  incomes,  producing  little  or  no  revenue  —  producing  nothing, 
apparently  other  than  the  indefinite  swelling  of  the  larger  incomes. 

Section  IV — Convenience  and  Security  of  Indirect  Taxation 
Article  1 — Convenience. 

It  may  be  urged  in  favour  of  indirect  fiscal  methods,  in  which  the 
tax  becomes  an  indistinguishable  part  of  price,  that  the  contributor 
pays  the  tax  at  the  most  convenient  time;  or  escapes  it  altogether. 
As  Prince  Bismarck  has  been  quoted  in  support  of  this  position,  the 
words  of  another  German  may  be  cited  in  the  same  connexion. 

"On  penalty  of  death,"  says  a  writer,  ^  dealing  with  taxes  on  necessaries, 
"  Nature  compels  us  to  eat,  and  so  on  penalty  of  death  we  are  compelled 
to  pay  the  bread  and  meat  taxes.  The  man  who  fails  to  pay  his  direct 
taxes  may  have  his  goods  distrained,  but  he  cannot  be  punished.  But 
the  man  who  is  unwilling  to  pay  the  taxes  on  bread  and  meat  must  die 
of  hunger.  It  is  a  truly  diabolical  system.  For  by  increasing  burdens 
on  the  food  of  the  people  civilisation  in  general  is  deteriorated,  the  masses 
are  placed  in  the  unworthy  position  that  they  can  only  satisfy  their 
most  urgent  needs,  while  the  resources  of  culture  which  they  create  are 
monopolised  by  those  who  have  no  right  to  them  save  the  fact  of  possession. 
The  system  of  indirect  taxation  is  in  direct  antagonism  to  civilisation." 

Taxes  of  this  kind,  pressing  upon  wages  everywhere,  deteriorate 
the  whole  food  supply  of  the  masses.  "The  German  Labour  Market 
Correspondence  for  December,  1901,  reported^  that  the  average  price 
of  provisions  had  increased  7I  per  cent,  at  Leipzig,  and  at  Chemnitz 
and  at  other  Saxon  towns  12  j  per  cent.  So,  too,  Dr.  G.  Creuzbacher, 
in  his  inquiry  into  the  food  consumption  of  the  town  of  Munich,  shows, 
that  the  consumption  of  meat  has  decreased  even  in  that  well-to-do 
city  during  recent  years.  While  the  population  of  Munich  increased 
between  1881  and  1900  109.75  pei"  cent  ,  the  consumption  of  meat  only 
increased  81.33  per  cent.,  the  decrease  per  head  being  from  94.8  to 
81.8  kilogrammes.  .  .  .  Meanwhile,  the  consumption  of  horse 
flesh  has  increased  —  a  sinister  fact  whose  significance  cannot  be 
misunderstood.  ...  In  his  report  for  1902  the  factory  inspector 
for  Leipzig  said:  'The  economic  conditions  of  the  workers  have 
not   improved   during   the  past   year,   since   the   incomes   of  many 

•  Die  Lebensmiltlezdlle  und  die  indirecten  Slcurer,  cited  by  Dawson.    Protection  In  Germany,  p.  193. 
'  Ibid.,  p.  197. 


142^  Indirect  Taxation  Pt.  II 

workpeople  have  undergone  a  further  diminution,  partly  owing  to  a 
reduction  of  wages  and  partly  owing  to  a  curtailment  of  the  hours  of 
work,  and  since  the  prices  of  the  most  important  articles  of  food  have 
increased.  The  endeavour  to  economise  shows  itself  in  the  diminution 
of  the  consumption  of  meat,  and  the  larger  demand  for  horse  flesh.' 
The  same  thing  was  reported  from  Berlin,  Hamburg,  Halle,  Altona, 
Bochum,  Dortmund,  Horde,  Schwerte,  and  other  industrial  towns." 

M.  Yves  Guyot^  gives  a  like  account  of  the  taxation  of  food  products 
in  France:  "In  Paris,"  he  says,  "while  taxes  have  increased,  the 
consumption  of  fresh  meat  has  decreased  relatively  to  the  popula- 
tion. .  .  .  The  annual  ration  of  the  adult  Parisian  is  only  87  kilos 
of  meat  instead  of  the  108  kilos  of  the  soldiers.  There  has  been  a 
decrease  instead  of  increase."  An  analogous  condition  is  shown  in  the 
reports  from  Amiens,  Bordeaux,  Bourges,  Grenoble,  Lille,  Limoges, 
Lyon,  Marseilles,  Nantes,  Nimes,  Rennes,  Roubaix.^  "The  conclusion 
is  that  the  relative  decrease  of  the  consumption  of  meat  in  the 
majority  of  large  towns  of  France  proves  the  injury  resulting  from 
the  taxes  which  increase  the  price  0.35  c.  per  kilogramme."^ 

Thus  the  convenience  of  indirect  taxation  of  vital  needs  seems  chiefly 
the  convenience  of  relative  degrees  of  starvation;  for  the  payment  of 
such  taxes  can  never  be  long  deferred  or  they  will  indeed  be  escaped  in 
this  world  at  least. 

Article  2 — Security. 

Another  advantage  urged  in  favour  of  indirect  fiscal  methods  is  that 
they  permit  the  taxing  of  a  people  without  their  knowing  how  much 
they  pay  or  having  any  control  over  the  process.  A  people  which  would 
not  tolerate  a  certain  amount  of  taxation,  if  levied  directly,  may  with 
ease  be  forced  to  pay  a  much  greater  amount  without  being  conscious 
of  the  fact.  As  has  been  well  said,  when  a  direct  tax  would  cause  a 
revolution,  indirect  methods  permit  the  taxation  of  the  bread  out  of 
the  mouths  of  a  population  with  no  results  other  than  complaints  of  hard 
times.  Indirect  methods  thus  render  the  administration  largely  in- 
dependent of  popular  suffrage.  Where  an  administration  controls  a 
few  distributive  centres,  it  may  live  with  ease  upon  the  resources  of 
a  population,  even  though   it  may  be  in    a    state    of    revolution. 


•  Le  Pain  et  la  Viande  dans  le  Motide,  pp.  27-29. 
'  Ibid.,  p.  30. 

•  Ibid.,  p.  49. 


Bk.  I  Taxation  of  Consumption  143 

"When  in  Ireland,  during  the  height  of  the  Land  League  agitation," 
says  Henry  George,^  "I  was  much  struck  with  the  ease  and  certainty 
with  which  an  unpopular  government  can  collect  indirect  taxes.  At 
the  beginning  of  the  century  the  Irish  people,  without  any  assistance 
from  America,  proved  in  the  famous  Tithe  war  that  the  whole  power  of 
the  English  Government  could  not  collect  direct  taxes  they  had  resolved 
not  to  pay;  and  the  strike  against  rent,  which  so  long  as  persisted  in 
proved  so  effective,  could  readily  have  been  made  a  strike  against 
direct  taxation.  Had  the  government  which  was  enforcing  the  claims 
of  the  landlords,  depended  on  direct  taxation,  its  resources  could  thus 
have  been  seriously  diminished  by  the  same  blow  which  crippled  the 
landlords;  but  during  all  the  time  of  this  strike  the  force  used  to  put 
down  the  popular  movement  was  being  supported  by  indirect  taxation 
on  the  people  who  were  in  passive  rebellion.  The  people  who  struck 
against  rent  could  not  strike  against  taxes  paid  in  buying  the  commodi- 
ties they  used.  Even  had  rebellion  been  active  and  general,  the  British 
Government  could  have  collected  the  bulk  of  its  revenue  from  indirect 
taxation,  so  long  as  it  retained  command  of  the  principal  towns." 

This  passage  shows  the  distinction  between  direct  and  indirect  fiscal 
methods,  in  relation  to  popular  political  movements.  With  control 
of  a  few  ports  and  industrial  centres,  an  administration  may  support 
itself  indefinitely  from  the  resources  of  a  population,  which,  under  a 
direct  system,  would  be  in  active  revolution.  This  is  not  always  a 
disadvantage  to  the  people  so  governed.  Such  a  possibility  may  tide 
them  over  ignorant  and  aimless  popular  agitations  which,  if  successful, 
would  work  wreck  and  ruin.  But,  when  the  necessary  action  of  the 
indirect  taxation  of  necessaries  is  understood  in  relation  to  the  distri- 
bution of  the  wealth  of  a  society,  such  security  seems  but  the  crust  over 
a  volcano,  whose  certain  eruption  is  but  rendered  more  dangerous. 

Section  V  —  Expense  of  Indirect  Taxation 

Great  expense  is  involved  in  all  indirect  forms  of  taxation,  in  com- 
parison to  the  amount  realized  by  the  state.  By  indirect  means  of 
raising  social  revenue  the  people  are  forced  not  only  to  pay  the  tax 
in  increased  prices  but  in  addition  all  profits  and  interest  charged 
by  traders  on  capital  advanced  in  the  payment  of  excise  and  customs, 
together  with  a  host  of  other  augmentations,  varying  with  conditions 
and  articles.    The  following  calculation  serves  as  illustration:    It  was 

^Protection  and  Free  Trade,  p.  8i. 


144  Indirect  Taxation  Pt.  II 

estimated  at  one  time  in  England  that  an  extra  tax  of  2s.  per  gallon 
imposed  by  Parliament  upon  ardent  spirits  would  produce  £1,000,000. 
Based  on  the  conditions  in  Scotland,  the  following  estimates  may  be 
made.  When  the  Act  imposing  the  2s.  tax  came  into  operation, 
meetings  were  held  by  spirit  dealers  in  Edinburgh  and  Glasgow;  the 
resolution  adopted  was  that  the  price  of  whiskey  should  be  increased  by 
one  penny  per  gill.  There  being  thirty-two  gills  in  the  imperial  gallon, 
the  increased  price  was  at  the  rate  of  2s.  8d.  per  gallon,  one  third 
more  than  the  increased  tax  imposed  by  Parliament.  The  duty  on 
all  spirits  was,  however,  charged  per  gallon  on  what  was  techni- 
cally called  "proof  strength."  The  spirits  were  sold  to  consumers 
at  about  the  proportion  of  one  gallon  of  water  to  four  gallons  of 
proof  spirits. 

"Starting,  then,  from  this  point,"  says  a  writer, ^  treating  the  sub- 
ject in  this  connexion,  "with  a  new  calculation  respecting  the  total 
burden  imposed  on  the  public,  these  are  the  results :  On  four  gallons 
of  proof  spirits  Parliament  has  imposed  an  additional  duty  of  2S.'j)er 
gallon  or  8s.  in  all.  The  publicans  and  retail  spirit  dealers,  by  the  addi- 
tion of  one  gallon  of  water  convert  these  foiir  gallons  into  five  of  the 
strength  which  is  desired  by  the  purchasers;  and  in  accordance  with  the 
resolutions  already  referred  to,  they  charged  an  increased  rate  of  2s.  8d. 
on  each  of  these  five  gallons  or  13s.  4d.  in  all.  Thus  while  the  Chan- 
cellor of  the  Exchequer  receives  8s.,  the  public  pays  13s.  4d.,  to  enable 
him  to  collect  the  smaller  sum.  To  obtain  £1,000,000  then  from 
these  parties,  it  is  necessary  to  impose  an  additional  burden  of  66f 
per  cent.,  or  £666,666  in  all." 

It  is  estimated  that  equitably  devised  direct  taxes  cost  on  the  average 
2§  per  cent  in  the  collection,  on  which  basis  the  cost  of  the  revenue 
derived  would  have  been  but  £25,000. 

"It  is,  therefore,  the  same,"  says  Mr.  M'Laren,  "as  if  aland  owner 
should  prefer  to  borrow  £10,000  at  an  expense  of  66f  per  cent.,  or 
£6,666  to  obtaining  it  at  the  rate  of  2|  per  cent,  or  for  £250  in  all  by 
mortgaging  his  estate." 

The  above  estimates  refer  to  excise  taxation.  The  import  duty  is 
more  extravagant  for  the  reason  that  it  raises  the  price  of  the  home 
product  while  not  bringing  a  shilling  of  revenue  into  the  treasury:  two 
sources  of  supply  are  taxed  while  one  alone  produces  income.    This  is 

'  Indirect  Taxation,  Duncan  M'Laren.    Read  at  a  meeting  of  the  Social  Science  Association,  £diD« 
burgh,  i860. 


Bk.  I  Taxation  of  Consumption  14c 

shown  by  a  study  of  the  following  estimates,  based  upon  the  supposi- 
tion that  England  some  day  decides  to  tax  her  grain  supply,  as  has  been 
suggested,  both  for  revenue  and  preferential  objects: 

With  a  duty  of  2s.  per  quarter,  or  about  6d.  per  cwt.  (i  cwt.  =  112 
lbs.;  I  quarter  =  480  lbs.)  Mr.  Chiozza-Money,!  gives  the  follo\\ang 
figures,  representing  the  total  grain  consumption  of  the  United  King- 
dom for  1902: 

Cwts. 
From  foreign  countries    ....     176,000,000 
From  British  possessions.       .       .       .       35,000,000 
Home  grown 160,000,000 


Cwts.     371,000,000 

"At  6d.  per  cwt.,"  he  continues,  "  the  extra  cost  to  the  consumer  would 
be  £9,275,000,  but  the  revenue  would  gain  only  6d.  per  cwt.  on  the 
foreign  supply,  viz.,  £4,400,000." 

Thus  revenue  raised  through  import  taxation  swells  the  price  of 
all  goods  affected  directly  or  indirectly,  while  only  a  part  of  these  pro- 
duce revenue  for  the  state. 

A  striking  instance  of  the  waste  of  wealth  due  to  taxation  of  this 
kind  is  reported  from  Australia:  "Meat  in  Victoria,"  says  Mr.  Chomley^ 
"has  been  raised  to  great  prices  by  the  stock  tax  on  sheep  and  cattle 
coming  into  the  Southern  Colony  from  the  pastures  of  New  South 
Wales  and  Queensland.  .  .  .  Another  effect  of  the  stock  tax, 
entirely  logical,  yet  so  grotesque  and  tyrannous  as  to  shock  even  con- 
vinced protectionists,  arose  through  the  admission  of  sheep  in  bond 
to  be  slaughtered  in  Melbourne  and  exported  as  frozen  mutton  to  Eng- 
land. The  sheep's  heads  were  not  exported,  and  during  the  time  of 
severe  distress  in  Melbourne  poor  women  and  children  visiting  the 
slaughter  yards  obtained  there  a  nutritious  article  of  food  which  was 
a  blessing  in  many  households.  But  on  these  heads  no  duty  had  been 
paid,  and  therefore  a  paternal  protectionist  government  had  to  devise 
means  to  prevent  them  from  going  into  consumption  and  afilicting 
the  people  with  the  curse  of  cheap  food.  Accordingly  they  sent  to  the 
abattoirs  customs  oflficers  and  barrels  of  kerosene  oil.  The  heads  were 
piled  in  great  heaps,  soaked  with  oil,  and  burned  before  the  eyes  of 
hungry  women  and  children." 

'  Through  Preference  to  Protection,  p.  35. 

*  Protection  in  Canada  and  Australasia.    C.  H.  Chomley,  p.  168.    Additional  instances  of  the  waste  in 
indirect  methods  will  be  found  on  p.  240. 


146  Indirect  Taxation  Pt.  II 

Under  ordinary  conditions,  such  demonstration  of  the  destructive 
nature  of  indirect  taxes  would  never  appear;  the  consumer,  instead  of 
having  his  food  and  the  necessaries  of  his  trade  burned  before  his  eyes, 
is  compelled  to  work  longer  to  obtain  the  same  goods.  The  destruction 
of  his  wages  and  the  return  for  his  labour  is,  however,  no  less  real  in  one 
instance  than  in  the  other;  his  strength  and  wages  are  burned  instead 
of  the  things  they  buy. 

Indirect  taxation  of  consumption  redounds  to  the  disadvantage  of 
the  people  supporting  such  measures  in  many  other  ways.  Taxes 
on  consumption  diminish  the  quantity  consumed;  where  the  actual 
amount  is  not  checked,  the  possible  gain  is  restricted.  All  industries 
not  supported  by  indirect  taxation  will  find  their  markets  suppressed 
by  such  methods.  An  instance  may  be  presented  in  which  an  indirect 
tax  levied  by  England  upon  a  foreign  population  suppresses  English 
industry.  Among  the  most  effectually  indirect  taxes  in  existence  is 
the  Indian  salt  tax.  Here,  the  English  people  lift  the  burden  from  their 
own  shoulders  and  place  it  upon  those  of  their  fellow-subjects  in  India. 
Such  methods  at  first  sight  seem  the  height  of  political  wisdom;  the 
English  consumer  at  home  is  unaffected,  and  the  Indian  Administra- 
tion obtains  the  entire  revenue.  The  average  annual  consumption  of 
salt  in  England  is  62  lbs.;  25  lbs.  are  considered  essential;  the  average 
consumption  in  India  is  about  half  that  amount,  while  the  consumption 
of  the  upper  classes  will  reduce  the  average  still  lower  for  a  large  portion 
of  the  Hindu  millions.^ 

The  medical  profession  traces  the  prevalence  of  leprosy  and  other 
diseases  to  the  lack  of  sufficient  salt,^  and  the  cattle  and  agriculture  of 
the  country  seem  vitally  affected  by  the  same  cause.^  What  are  the 
effects  of  such  restricted  consumption  on  English  trade? 

"It  is  also  very  curious,"  says  Mr.  Pennington,^  "to  see  what  the 
merchants  and  others  concerned  in  the  British  salt  trade  have  to  say 
about  this  question  of  the  consumption  of  salt  in  India  when  the  falling 
off  begins  to  touch  their  pockets.  *To  the  population  of  India,' 
says  an  advocate  of  more  English  salt  for  Indian  consumption,  'the 
complete  abolition  of  the  salt  tax  would  be  a  reform  beneficent  beyond 
conception.     The  consumption  of  salt  would  probably  be  trebled  within 


•  Mr.  J.  B.  Pennington,  B.  L.  (Cantab.).      The  Imperial  and  Asiatic  Quarterly  Renew,  October,  1904, 
p4307- 

•  Ibid.,  Proceedings  of  the  East  Ittdia  Association,  pp.  382-3. 
»  Ibid.,  p.  303. 

•  Ibid.,  p.  297. 


Bk.  I  Taxation  of  Consumption  147 

three  years  — '  and  yet  no  one  would  eat  more  salt  than  was  good  fof 
them.  'Finally,  the  salt-producers  and  shippers  have  worked  them- 
selves into  the  belief  that  the  salt  tax  ought  to  be  abolished.  On  this 
point  they  say:  The  question  of  the  complete  abolition  of  the  salt  tax — 
not  inaptly  termed  the  "  bread  tax  of  the  Hindu  " — is  probably  the  most 
important  question  that  can  receive  the  attention  of  members  of  the 
EngHsh  salt  trade  as  a  united  body  at  the  present  time,  and  so  on.' " 
The  following  1  is  an  extract  from  a  letter  to  Mr.  Pennington  in  this 
connexion: 

London,  July  23,  1904. 
Dear  Sir: 

I  have  read  with  great  pleasure  the  report  you  have  been  good  enough  to  send  me 
of  your  paper  on  the  Salt  Tax  in  India,  a  subject  which  much  interests  me,  as  fifty 
years'  experience  in  the  salt  trade  of  this  coimtry  has  often  brought  it  directly  to  my 
notice.     .     .     . 

From  this  point  of  view  the  Indian  Salt  Tax  is  not  exclusively  an  Indian  question, 
but  one  which  also  materially  affects  many  in  terests  in  England  itself;  and  now  that 
we  are  invited  to  "think  imperially,"  it  cannot  be  inappropriate  to  deal  with  the  matter 
on  the  broader  basis,  and  consider  it  in  its  relation  to  British  Imperial  interests.  It 
is  computed  that  the  consumption  of  salt  in  India,  with  its  population  of  240,000,000, 
would  soon  be  trebled  were  the  duty  abolished,  and  this  calculation  is  to  some  extent 
supported  by  the  fact  that  since  the  reduction  of  the  duty  on  March  31st  of  last  year 
the  consumption  has  greatly  increased,  so  that,  besides  the  larger  demand  for  salt 
manufactured  in  India  itself,  the  exports  from  Liverpool  to  Calcutta,  etc.,  for  the  six 
months  to  the  end  of  June  last  amount  to  140,000  tons,  against  88,000  tons  in  the  same 
period  of  1903,  and  82,000  in  the  same  period  of  1902.  This  extra  trade  benefits  not 
only  the  English  salt  makers,  both  employers  and  employed,  and  the  English  railways 
and  canals  engaged  in  transporting  it  to  the  coast,  but  is  also  a  boon  to  the  British 
shipowner  and  sailor,  giving  them  better  emplo5Tnent  outward  to  the  Indian  ports' 
Nor  does  the  advantage  end  there,  for  the  larger  supply  of  tonnage  thus  available  to 
the  Indian  producer  for  the  export  of  his  rice,  wheat,  jute,  cotton,  linseed,  etc.,  is  an 
item  of  great  importance  to  the  development  of  the  Indian  export  trade  with  other 
countries. 

Besides  this,  it  is  obvious  that  the  large  increase  in  the  consumption  of  salt  in  India, 
which  it  is  expected  would  result  from  the  abolition  of  the  tax,  would  give  employment 
to  an  enormous  number  of  hands  required  for  its  distribution  throughout  the  country, 
would  add  to  the  revenue  of  the  railways  and  canals  of  India,  and  increase  the  profits 
derived  from  the  salt  trade  by  those  engaged  Ln  its  manufacture.  When  all  this  is 
taken  into  account,  I  believe  the  advantages  accruing  to  the  various  interests  enumer- 
ated above,  added  to  the  direct  benefits  derived  by  the  Indian  natives  from  the  freer 
use  of  salt  in  their  food,  in  the  curing  of  fish,  the  preservation  of  meat  and  vegetables, 
the  feeding  of  cattle,  the  cultivation  of  land,  and  in  many  other  ways,  would,  if  it 
were  possible  to  express  them  in  figures,  be  found  to  far  outweigh  the  amoimt  (some 


'  Ibid.,  pp.  307-8. 


148  ^Indirect  Taxation  Pt.  II 

£6,000,000,  I  believe)  of  the  revenue  derived  by  the  Indian  Government  from  the 

tax.     ... 

I  remain,  dear  sir,  yours  truly, 

J.  W.  Fox, 

J.  B.  Pennington,  Esq.,  Late  managing  Director  Weston  &  Westall,  Ltd., 

Yarmouth,  Isle  of  Wight.         ■  London  agents  to  the  Salt  Union. 

This  most  indirect  of  indirect  taxes  thus  suppresses  a  great  English 
industry,  with  all  its  ramification  of  transportation  and  distribution, 
.  and  must,  consequently,  check  English  production  and  the  demand  for 
English  labour.  Cicero  ^  says  that  the  Romans  used  to  protect  their 
growers  of  grapes  and  olives  by  forbidding  the  people  beyond  the  Alps 
to  raise  these  articles  of  food.  This  destroyed  not  only  the  vineyards 
and  orchards  of  others,  but  the  labour  of  the  Roman  people,  required  to 
pay  the  increased  price.  The  modern  duty  has  the  same  effect;  it 
stifles  productive  industry  at  home  and  abroad,  and  destroys  the  labour 
necessary  to  pay  taxed  prices. 

The  Continental  System  of  Napoleon  was  one  of  the  most  elaborate 
networks  of  indirect  taxation  ever  woven;  and  the  amount  of  wealth 
it  destroyed  in  France  must  have  been  enormous.  A  striking  example 
of  such  destruction  is  found  in  the  pages  of  Thiers.  ^  Speaking  of 
Marseilles,  formerly  the  queen  of  the  Mediterranean  and  since  become 
its  queen  again,  he  says:  "For  twenty-five  years  she  saw  more  than 
three  hundred  vessels  of  commerce  rotting  at  her  quays  without 
moving.  .  .  .  The  only  distraction  in  her  distress  was  when  some 
captured  English  merchandise  was  abandoned  to  the  flames  under  the 
eyes  of  a  people  dying  of  hunger;  watching  the  destruction  in  a  few  hours 
of  riches  upon  which  they  might  have  lived. 

"Born  and  brought  up  at  Marseilles,"  he  adds,  "I  still  recall  this 
spectacle  and  seem  to  see  the  rank  of  motionless  vessels  ranged  in 
lines  from  the  place  de  la  Cannebiere  as  far  as  the  fort  Saint- Jean. 
A  child  at  the  time,  and  often  on  the  quays,  I  used  to  study  these  vessels; 
I  knew  their  names  and  appearance  as  one  knows  the  houses  in  a  famil- 
iar street,  and  I  never  saw  one  move  during  the  last  years  of  the  Em- 
pire. Its  fall,"  he  says,  "was  the  occasion  of  a  joy  such  as  I  have 
never  seen  in  any  other  time  or  circumstances." 

In  this  way  is  seen  at  a  glance  how  the  taxes  imposed  by  "Napoleon 
in  support  of  his  Continental  System  destroyed  all  the  wealth  repre- 


•  Commonwealth,  III.,  ix. 

2  Eistoire  de  V Empire,  Tome  IV.,  Livre  XXXVII,  p.  243. 


Bk.  I  Taxation  of  Consumption  149 

sen  ted  in  these  vessels;  all  the  wealth  their  natural  occupations  might 
have  created;  all  the  wealth  which  might  have  been  enjoyed  and  con- 
sumed by  the  men  employed  in  working,  loading  and  unloading  them, 
during  that  period  both  at  home  and  abroad;  all  the  wealth  burned 
in  Marseilles  and  at  other  places,  together  with  all  the  wealth 
wasted  throughout  the  country,  on  account  of  the  artificial  scarcity 
due  to  such  methods.  Direct  destruction  due  to  taxation  of  this  kind, 
such  as  the  burning  of  food  products,  or  the  locking  up  of  shipping 
is  rarely  seen  in  its  crude  forms.  During  the  Napoleonic  regime,  the 
people  of  central  France  did  not  see  a  portion  of  their  crops  and  vine- 
yards burning  or  rotting  before  their  eyes,  but  their  produce  and  labour 
were  destroyed,  however,  exactly  as  in  a  fire,  by  means  of  forced  prices 
on  one  side,  and  the  strangling  of  the  consuming  powers  of  the  people 
on  another.  And,  as  the  Indian  salt  tax  starves  the  cattle  and  population 
of  India,  does  it  force  English  labour  out  of  employment,  reduce  the 
returns  to  English  shipping,  force  up  the  price  of  foodstuffs  in  the  Eng- 
lish market,  through  the  checking  of  tonnage  in  foreign  ports,  and  react 
adversely  upon  the  population  of  England,  in  direct  proportion  to  the 
consuming  powers  suppressed.  Permanent  and  profitable  commerce 
cannot  be  forced;  commerce  must  be  profitable  to  all  concerned,  or 
cease;  and  where  ports  or  markets  are  forced  or  protected  by  artificial 
fiscal  methods,  the  nation  imposing  the  taxes  congests  its  wealth  and 
checks  its  industrial  development  through  the  stifling  of  consumption. 

The  advantages  of  indirect  systems  have  been  summarized  under 
four  headings:  (i)  taxing  the  foreigner;  (2)  the  best  source  of 
revenue;  (3)  convenience  and  security;  (4)  expense.  Counter  con- 
siderations maybe  presented: 

I.  There  seems  reason  to  believe  that  no  nation  can  ever  tax  foreign 
sources  in  reality.  Where  such  results  are  temporarily  apparent,  the 
nation  burdens  the  unrealized  possibilities  of  its  own  commerce.  It 
is,  moreover,  always  possible  for  foreign  nations  to  retaliate  in  kind,  so 
that  no  even  apparent  advantage  could  be  gained  for  any  length  of  time. 

II.  Indirect  taxes,  in  order  to  produce  important  or  constant 
revenue,  must  be  laid  upon  the  necessaries  of  life  and  industry.  The 
taxation  of  such  necessaries  is,  in  consequence,  the  same  thing  as  the 
direct  assessment  of  living  expenses.  As  the  necessary  living  expenses 
of  the  poor  form  a  relatively  larger  part  of  income  than  the  necessary 
living  expenses  of  the  rich,  the  forced  effects  of  such  taxation  will  be 
the  same  thing  as  an  inversely  proportionate  income-tax;   levjdng 


150  Indirect  Taxation  Pt.  II 

increasing  tribute  upon  poverty,  and  exempting  wealth  in  proportion 
to  its  amount. 

III.  The  convenience  created  by  indirect  methods  seems  largely 
measured  by  the  convenience  of  different  forms  of  starvation,  and 
their  security  dependent  upon  ignorance  and  the  time  necessary  to 
bring  about  the  inevitable  political  upheaval  due  to  disproportionately 
placed  burdens. 

IV.  The  expense  of  such  taxation  is  in  two  ways  greater  than  neces- 
sary:  First,  in  order  to  raise  revenue  from  consumption,  it  is  essential  to 
raise  the  price  of  all  sources  of  supply,  although  but  few  of  these  pro- 
duce revenue.  Again,  checks  on  consumption,  at  home  or  abroad, 
destroy  the  industries  which  might  supply  the  suppressed  demand, 
resulting  in  the  loss  of  the  wealth  such  markets  might  create. 

The  subject  may  be  left  with  the  following  passages  from  Adam 
Smith  and  Mill.  "A  tax  upon  the  necessaries  of  life,"  says  the  former,^ 
"operates  exactly  in  the  same  manner  as  a  direct  tax  upon  the  wages  of 
labour."  To  the  extent  in  which  wages  are  influenced  by  the  price 
of  provisions,  wages  will  rise  with  such  taxes,  but,  as  wages  are  controlled 
chiefly  by  the  supply  and  demand  in  the  laboiu"  market,  and  not  by  the 
price  of  provisions,  such  taxes  act  as  a  direct  burden  upon  wages  which 
can  apparently  never  raise  the  return  to  labour  beyond  mere  subsistence 
as  long  as  an  unemployed  supply  exists. 

"There  are  some  forms  of  indirect  taxation,"  says  Mill,^  "which  must 
be  peremptorily  excluded.  Taxes  on  commodities,  for  revenue  purposes, 
must  not  operate  as  protecting  duties,  but  must  be  levied  impartially 
on  every  mode  in  which  the  articles  can  be  obtained,  whether  pro- 
duced in  the  country  itself,  or  imported.  An  exclusion  must  also  be 
put  upon  all  taxes  on  the  necessaries  of  life,  or  on  the  materials  or 
instruments  employed  in  producing  these  necessaries.  Such  taxes 
are  always  liable  to  encroach  on  what  should  be  left  untaxed,  the  in- 
comes barely  sufficient  for  healthful  existence. 

Taxes  on  consumption,  in  the  light  of  the  foregoing  considerations, 
are  at  variance  with  the  principles  laid  down  by  Adam  Smith. 

»  The  Wealth  of  Nations.     Bk.  V.,  ch.  ii.,  p.  467. 

*  Principles  of  Political  Economy.    Bk.  V.,  ch.  vi.,  §  2,  p.  SS3- 


"Book  II 
DIRECT    TAXATION 

CHAPTER  I 

PERSONAL    PPOPERTY 

Section  I  —  Classification  of  Property.  Section  II  —  Income.  Section 
III  —  Inheritance.  Section  IV  —  Credits.  Section  V  —  Chattels. 
Section  VI — Miscellaneous  Taxes. 


Section  I  —  Classification  of  Property 

NO  DETAILED  examination  of  the  great  number  of  specific 
imposts  classed  as  direct  is  essential  to  the  present  purpose. 
The  attention  is  occupied  with  the  sources  from  which  direct 
taxes  may  be  derived,  for  the  purpose  of  separating  and  clas- 
sifying these  sources  with  reference  to  their  relative  suitability  in  the 
production  of  social  revenue. 

Direct  taxes,  as  all  others,  must  fall  upon  property  in  some  form. 
The  chief  distinction  between  indirect  and  direct  schedules  is  that  the 
latter  reach  immediately  the  property  upon  which  the  burden  is  sup- 
posed to  rest.  A  study  of  direct  systems,  therefore,  leads  to  an  analysis 
and  classification  of  the  different  forms  of  property.  General  property 
falls  into  two  great  classes:  personal  and  real;  in  legal  terms,  movable 
and  immovable  property.  These,  again,  may  be  subdivided  for  fiscal 
purposes  as  follows: 

/.     Personal  Property. 

I.  Income.     2.  Inheritance.     3.  Credits.    4.  Chattels. 

5.  Miscellaneous. 

II.    Real  Property. 

I.  Capital  Value  of  Improvements.     2.  Capital  Value  of  Land. 

3.  Rental    Value  of  Improvements.     4.  Rental  Value  of  Land. 

Section  II — Income 
The  principle  of  contribution  in  proportion  to  means  forms  the  most 

151 


152  Direct  Taxation  Pt.  II 

acceptable  basis  for  inquiry  into  the  relative  merits  of  different  sources 
in  supplying  social  revenue.  This  principle  is  the  first  laid  down  by 
Adam  Smith,  and  upon  it,  as  he  says,  depends  the  equality  or  in- 
equality of  the  burden  of  taxation. 

The  principle  of  contribution,  in  accordance  with  means,  suggests 
the  levying  a  certain  percentage  on  incomes.  The  income-tax,  at  first 
sight,  appears  to  be  the  tax  fulfilling  such  conditions  most  satisfactorily. 
The  income-tax  is,  however,  open  to  serious  objections;  creating  diffi- 
culties  in  collection,  and  inequalities  in  incidence,  not  at  once  obvious. 
Perhaps  the  first  difl&culty  found  is  the  variable  nature  of  incomes 
which  creates  either  a  variable  revenue  for  the  state,  or  a  variable  amount 
to  be  paid  by  the  contributor.  Individual  incomes  vary  within  a  wide 
range,  at  times  cease  altogether,  or  develop  rapidly  in  certain  circum- 
stances. The  result  is,  that  an  income-tax  may  be  subject  to  varia- 
tion, either  in  the  amount  derived  or  in  the  amount  payable  by  the 
individual;  both  among  the  most  serious  objections  to  a  tax,  and 
this  upon  the  presumption  that  the  income-tax  could  be  assessed  and 
collected  with  fairness  and  regularity.  Experience  shows,  however,  that 
such  a  supposition  is  far  from  the  truth;  the  income-tax  in  practice 
is  widely  removed  from  such  a  tax  in  theory.  The  following  are  some 
of  the  causes  to  which  this  difference  may  be  traced: 

The  same  percentage  upon  different  incomes  does  not  constitute  an 
equal  burden.  A  man  in  receipt  of  an  income  of  £50  paying  £5  in 
taxes  pays,  in  reality,  a  far  greater  tax  than  a  man  enjoying  a  revenue 
of  £10,000  paying  £1,000  in  taxation.  This  disparity  is  so  evident 
that  all  systems  of  income  taxation  attempt  to  avoid  it  by  different 
means.  Again,  a  certain  percentage  of  the  same  amount  of  revenue 
derived  from  different  sources  may  constitute  an  unequal  contribution. 
An  income,  for  example,  derived  from  investment,  and  the  same  income 
derived  from  necessarily  continued  personal  effort,  represent  distinct 
subjects  for  taxation. 

The  graduated  assessment,  together  with  the  exemption  of  incomes 
only  sufficient  for  bare  subsistence,  form  the  most  familiar  methods  of 
avoiding  these  difficulties.  Thus,  if  £50  is  regarded  as  the  minimum 
income  essential  for  existence,  only  incomes  above  that  amount  may 
be  made  subject  to  contribution  and  that  in  proportion  to  their  value; 
the  larger  the  income  the  greater  the  percentage  due.  These  suggestions, 
however,  are  necessarily  open  to  the  objections  of  discouraging  saving 
and  industry  in  both  the  poorer  and  richer  classes.    "To  tax  the  larger 


Bk.  II  Personal  Property  153 

incomes  at  a  higher  percentage  than  the  smaller,"  says  MilP  "is  to 
lay  a  tax  on  industry  and  economy;  to  impose  a  penalty  on  people  for 
ha\nng  worked  harder  and  saved  more  than  their  neighbours.  It  is 
not  the  fortunes  that  are  earned,  but  those  which  are  unearned,  that  it 
is  for  the  public  good  to  place  under  limitation.  A  just  and  wise  leg- 
islation would  abstain  from  holding  out  motives  for  dissipating  rather 
than  sa\dng  the  earnings  of  honest  exertion." 

If  the  progressive  income-tax  appears  of  advantage  in  lessening  the 
difference  between  the  richer  and  poorer  classes,  the  causes  of  the  dif- 
ference are  neglected.  A  wise  administration,  as  Mill  points  out, 
should  not  attempt  to  regulate  inequalities,  but,  on  the  contrary,  elimi- 
nate the  artificially  created  and  sustained  inequalities  of  opportunity 
constituting  the  original  cause  of  the  differences  involved.  Under 
any  system  of  income  taxation,  the  assessment  must  rely  largely 
upon  individual  estimates,  and  even  with  most  careful  administrative 
methods  it  is  practically  impossible  to  collect  an  income-tax  pro- 
gressively; thus,  not  only  may  the  larger  income  avoid  adequate 
contribution,  but  a  large  portion  of  such  property  escape  taxation 
altogether. 

The  most  effective  method  of  reaching  an  income  is  at  its  sources, 
by  authorizing  corporations  and  employers  to  deduct  the  tax  from 
interest,  the  amounts  due  on  securities  or  salaries,  and  to  empower 
tenants  to  deduct  the  amount  of  the  tax  from  rent.  This  cannot  be 
done  progressively,  as  corporation,  employer,  and  tenant  have  no  means 
of  estimating  the  total  amount  of  an  income;  they  deal  with  but  a 
portion  of  the  whole.  If,  on  the  other  hand,  no  attempt  is  made  to 
reach  the  income  at  its  source,  the  equable  collection  of  the  tax  is  more 
problematic,  little  remaining  upon  which  to  rely  but  the  statement  of 
individuals  or  corporations.  Again,  an  income-tax  would  collect  nothing 
from  imused  or  undeveloped  properties,  however  valuable;  the  specu- 
lator in  land,  holding  his  property  out  of  use,  would  not  be  taxed,  great 
as  might  be  its  annual  increase  in  value.  The  real-estate  owner,  on  the 
contrary,  who  added  to  the  value  of  his  holdings,  by  means  of  develop- 
ment and  improvement,  would  be  taxed  proportionately.  The  man 
whose  wealth  might  have  greatly  increased,  but  who  added  nothing  to 
the  social  wealth,  would  be  exempt,  while  the  productive  efforts  of  the 
other  would  be  laid  under  contribution. 

Incomes  again  differ  not   only  in  nature  but  duration,  presenting 

'  Principles  of  Political  Economy.     Bk.  V..  ch..  ii..  S  3,  p.  487. 


154  Direct  Taxation  Pt.  II 

other  grounds  for  distinctions  in  value,  and  widely  different  subjects 
for  taxation.  Incomes  not  only  vary  as  earned  through  personal 
exertion  and  derived  from  invested  capital,  but  these  latter  may  be 
permanent  or  tempo'rary,  and  differ  again  within  a  wide  range,  thus 
presenting  difficulties  of  relative  valuation. 

Again,  the  man  whose  income  is  due  to  his  own  efforts  is  under 
greater  obligations  to  save  a  part  of  his  resources  in  order  to  provide 
for  those  dependent  upon  him  than  the  man  deriving  his  means  from 
invested  capital;  yet,  when  savings  are  set  aside  or  invested,  they  be- 
come subject  to  taxation.  The  contributor,  therefore,  under  the  greater 
necessity  for  economizing  his  resources,  pays  not  only  upon  his  original 
income,  but  is  taxed  in  proportion  to  the  amount  he  is  able  to  save; 
he  pays  once  upon  his  original  income  and  twice  upon  the  amount  of 
savings  for  his  old  age  or  those  to  come  after  him.  Such  considerations 
suggest  the  exemptions  of  savings  in  any  system  of  income  taxation. 
Here,  however,  a  question  arises  with  reference  to  the  nature  of  savings : 
whether  an  amount  reserved  from  income  is  to  be  permanently  saved, 
or  spent  at  some  indefinite  period  after  the  returns  are  made.  There 
is  obviously  no  satisfactory  reply  to  such  a  question.  The  possibility 
might  be  suggested  of  fixing  a  different  rate  for  personal  or  invested 
incomes.  Such  a  distinction  in  rate  could  never  bear  any  accurate 
relation  to  the  incomes  under  contribution.  Terminal  incomes,  for 
example,  of  different  periods  of  duration,  vary  in  value.  Again, 
incomes  gained  from  whatever  source  and  under  whatever  conditions 
vary  indefinitely  in  value,  owing  to  circumstances  impossible  for  an 
administration  to  take  into  account.  Health,  ability,  age,  family 
position,  and  other  considerations  may  cause  two  incomes  of  the 
same  kind  and  amount  to  bear  no  relation  to  each  other  as  subjects 
for  taxation. 

"It  is  to  be  feared,  therefore,"  says  Mill,i  after  a  careful  analysis 
of  the  income-tax,  "that  the  fairness  which  belongs  to  the  principle 
of  an  income-tax  cannot  be  made  to  attach  to  it  in  practice:  and  that 
this  tax,  while  apparently  the  most  just  of  all  modes  of  raising  a  revenue, 
is  in  effect  more  imjust  than  many  others  which  are  prima  facie  more 
objectionable." 

The  income-tax  presents  a  more  or  less  unjust  and  inconvenient 
source  of  revenue,  however  estimated,  assessed  or  collected.  It  pos- 
sesses, however,  one  great  superiority  over  all  indirect  forms :  that  of 

'  Principles  of  Political  Economy,  Bk.  V.,  ch.  iii,  §  Si  P-  Soo. 


Bk.  II  Personal  Property  155 

economy;  it  involves  no  waste  or  destruction  of  property  or  labour,  and 
relatively  little  expense  other  than  the  cost  of  collection. 

Section  III  —  Inheritance 

A  tax  levied  upon  inheritance  is  not  open  to  many  objections  urged 
against  the  assessment  of  incomes.  There  is,  however,  one  important 
objection  to  taxation  of  inheritance.  As  estates  subject  to  death 
duties  are  generally  transferred  in  the  form  of  reaUzed  capital,  the 
inheritance  tax  becomes  not  a  tax  upon  revenue,  but  an  assessment  of 
capital.  The  variations  in  the  value  of  capital  in  different  hands  and 
under  different  conditions  create  difficulties  and  inequalities  in  the 
burden  imposed  by  this  tax  analogous  to  those  in  the  assessment  of 
income.  Irrespective  of  these  considerations,  the  inheritance  tax 
might  well  be  called  an  "unthrifty"  tax,  as  Adam  Smith  would  say;  for, 
where  any  large  amount  is  derived  from  it,  it  must,  on  account  of  the 
burden  laid  upon  capital,  and  not  upon  income,  check  the  productive 
power  of  the  society;  this  tax,  therefore,  imposes  a  burden  out  of  pro- 
portion to  the  benefit  derived.  It  presents,  nevertheless,  marked 
superiorities  over  all  taxes  yet  considered.  The  progressive  principle 
may  be  applied  with  a  much  closer  approximation  to  certainty  than 
in  any  form  of  income  assessment.  Inheritance  taxes,  again,  are  ex- 
ceptional in  the  ease  and  slight  expense  involved  in  their  collection. 
They  are  also  exceptional  in  the  ease  with  which  contribution  may  be 
avoided  entirely,  through  the  transfer  of  property  before  death. 

Section  VI  —  Credits 
Article  1 — Securities. 

After  the  income  and  inheritance  taxes,  perhaps  the  most  obvious 
method  of  placing  property  under  contribution  is  to  attempt  to  reach 
that  form  of  wealth  represented  in  credit  obligations.  Under  the 
general  heading  of  credits  may  be  grouped  stock,  shares,  bonds,  mort- 
gages, book  accounts,  bills,  notes,  partnerships,  and  interest  in  cor- 
porate wealth  of  various  kinds;  all  evidence,  in  fact,  of  wealth  due. 
Such  evidence  forms  the  basis  of  any  system  attempting  to  reach  credits 
for  fiscal  purposes.  This  evidence  of  the  debts  of  others  may  be  regarded 
as  an  unsatisfactory  source  from  which  to  derive  revenue,  for  three 
reasons: 

First,  such  methods  may  involve  the  taxation  of  the  same  property  at 


156  Direct  Taxation  Pt.  II 

least  twice,  or  perhaps  oftener.  Second,  because  the  incidence  of  such 
taxes  falls  chiefly  upon  those  least  able  to  bear  it;  namely,  borrowers. 
Again,  because,  owing  to  the  evanescent  nature  of  such  property,  it 
can  never  be  reached  or  taxed  upon  a  just  or  comprehensive  scale. 

An  ordinary  mortgage,  or  lien  upon  a  piece  of  real  estate,  is  typical 
of  the  great  majority  of  securities;  for  it  is  only  as  these  refer  to  speci- 
fic properties  that  they  possess  value.  Under  any  system  of  general 
property  taxation,  the  real  estate  itself  will  be  taxed  in  the  first  place; 
when,  therefore,  money  is  borrowed  upon  it,  and  the  mortgage  taxed, 
the  property  is  evidently  taxed  a  second  time.  If  money  is  borrowed 
on  the  mortgage,  and  the  second  credit  assessed,  the  same  value  is 
laid  under  contribution  in  three  different  instances.  If,  therefore,  a 
fixed  sum  is  distributed  upon  all  three  sources,  the  method  becomes 
cumbersome  and  difficult  to  apply.  If  taxes  are  assessed,  either  in  the 
form  of  le\ying  a  fixed  sum,  or  in  the  absorption  of  a  certain  percentage 
of  values  reached,  such  burdens  are  borne  chiefly  by  the  most  needy 
members  of  the  community:  borrowers.  The  borrower  is  in  need  of 
money  and  tempted  to  take  less  where  such  taxes  are  imposed;  the 
lender,  on  the  contrary,  is  never  obliged  to  take  less  for  his  capital  than 
the  average  rate  of  interest.  Where  mortgages,  or  credits,  are  taxed, 
such  taxes  may  apparently  in  most  cases  be  shifted  to  the  borrower; 
mortgages,  subject  to  taxation,  commanding  a  lower  rate  in  the  money 
market.  Capital  will  drift  toward  other  channels  until  the  average 
return  on  mortgages  bears  the  normal  relation  to  other  forms  of  invest- 
ment; or,  in  other  words,  until  the  tax  is  borne  by  the  real  property  owner, 
or  borrower.  It  seems,  therefore,  in  any  system  of  general  property 
taxation,  both  less  expensive  and  less  complicated  to  tax  the  real 
property  in  the  first  place,  and  exempt  credits  issued  against  it. 

These  considerations  are  based  upon  the  assumption  that  taxes 
of  this  nature  could  be  assessed  and  collected  with  uniformity;  such  an 
assumption  seems,  however,  far  from  the  truth.  Much  the  greatest 
volume  of  wealth  represented  by  credits  is  in  the  form  of  corporate 
obligations;  and  the  difficulty  m  the  assessment  of  these  is  very  great. 

The  taxable  securities  of  a  corporate  organization,  represented  by  its 
stock  and  bonded  indebtedness,  may  be  held  with  ease,  either  actually 
or  in  trust  outside  the  state  or  taxing  unit  in  which  the  corporation 
exists,  and  thus  escape  taxation.  If  only  credits  are  taxed,  and  the 
burden  is  not  shifted,  the  value  represented  by  rolling  stock,  land, 
buildings  or  plant  escapes.    If,  however,  the  actual  property  is  taxed, 


Bk.  II  Personal  Property  157 

the  securities  representing  it  should  be  exempt,  for  reasons  given. 
The  owners  of  such  securities  can  avoid  taxation  more  easily  than  any 
other  class,  and  those  for  whom  the  tax  is  designed  are  those  most 
likely  to  escape  contribution.  The  most  effective  methods  of  reaching 
these  values  is  through  the  land,  rolling  stock,  plant  or  franchises, 
to  which  they  represent  proportionate  titles.  Even  credits  held  in 
foreign  countries,  impossible  to  reach  in  any  other  way,  might  by  this 
means  contribute  their  share  to  the  administration  under  which  the 
wealth  represented  was  produced.  If,  however,  the  actual  property 
is  taxed,  no  attempt  should  be  made  to  tax  it  twice  through  its  credit 
representations.    Such  attempts  but  create  fraud  and  injustice. 

Article  2 — Bank  Deposits. 

Any  system  of  general  credit  taxation  would  attempt  to  reach  credits 
in  the  form  of  Bank  Deposits.  This  could  be  done  with  exceptional 
ease  at  slight  expense.  A  deposit  held  in  a  bank  to  the  credit  of  an 
individual  represents  a  promise  to  pay;  and,  as  no  institution  could 
hold  a  sum  of  money  out  of  use  representing  its  total  deposits,  these 
deposits  represent  the  real  property  against  which  the  bank  has  loaned 
the  depositors'  funds.  They  are  mortgages  held  by  the  creditor  against 
the  assets  of  the  bank,  and  considerations  advanced  in  connexion  with 
other  forms  of  credits  apply  to  these.  Bank  deposits,  however,  may  have 
no  relation  to  the  depositor's  resources;  he  may  have  a  large  deposit  in 
one  bank,  and  owe  that  or  some  other  institution  ten  times  the  amount. 
To  tax  such  credits  would  check  productive  enterprise;  the  ease  with 
which  it  may  be  done  rendering  it  peculiarly  disadvantageous.  If  an 
effective  system  of  taxing  bank  balances  were  put  into  force,  the  bank- 
ing business  would  be  vitally  affected,  and  the  advantages  of  credit  and 
Clearing  House  lost. 

Article  5  —  Coin. 

The  assessment  of  general  property,  as  a  basis  of  revenue,  involves 
the  assessment  of  money.  This  must  be  done  in  the  form  of  coin  or 
notes.  The  ease  with  which  coin  may  escape  contribution,  and  the 
fact  that  its  momentary  possession  has  no  relation  to  the  wealth  of  the 
individual,  need  not  be  developed.  Coin  could  only  be  reached  effect- 
ively through  bank  reserves,  and  the  attempt  to  tax  it  in  this  form 
would  result  in  a  tendency  to  hold  reserves  in  notes.  Where  a  fixed 
coin  reserve  is  made  legal,  its  taxation  might  not  have  the  slightest 


158  Direct  Taxation  Pt.  II 

relation  to  the  general  volume  of  notes  or  loans  depending  upon  it. 
A  tax  of  this  nature  would  probably  be  the  least  productive  and  most 
disadvantageous  form  of  direct  taxation.  It  would  affect  the  basis 
of  the  credit  and  monetary  system  of  the  country. 

Article  4  —  Notes. 

Irredeemable  paper  money  need  scarcely  enter  into  modern  economic 
discussion.  A  nation  or  bank  lending  its  authority  to  the  issue  of 
paper  money,  with  the  promise  to  redeem  it,  may  do  so  with  reference 
to  three  bases  of  security :  legislation,  credit,  and  gold  or  its  equivalent. 
If  notes  are  issued  upon  the  first  two,  a  debit  is  created  to  an  equivalent 
extent,  and  the  basis  of  the  debt  must  be  tangible  property  in  some  form. 
Redeemable  notes  in  the  last  analysis  rest  upon  some  actual  value  or 
the  issuers  would  possess  no  credit,  power  to  legislate,  nor  resources 
for  their  redemption;  this  value  is  apparently  the  best  subject  for 
taxation  in  all  cases.  Taxes  on  notes  could  again  be  effective  through 
bank  reserves  alone;  the  taxation  of  these  reserves  could  produce  but 
little  revenue  in  the  first  place,  and  would  tend  to  reduce  the  reserve  in 
the  second  —  a  dangerous  process.  If  the  notes  are  issued  against  gold 
or  its  equivalent,  the  same  considerations  apply;  in  this  case,  the  notes 
are  mortgages  upon  definite  rather  than  indefinite  property,  as  at  first. 
All  notes  of  whatever  nature,  in  order  to  represent  real  value,  must 
represent  real  assets;  if  an  attempt  is  made  to  tax  the  notes,  the  bulk 
of  these  will  escape  taxation,  and  such  notes  can  only  be  reached  in  the 
most  disadvantageous  form  —  that  of  bank  reserves.  If  the  assets 
are  taxed,  the  notes  should  be  free. 

There  are  other  forms  of  credit  property,  more  fleeting  and  intangible 
than  those  mentioned:  patents,  copyrights,  processes,  trademarks, 
good-will,  and  commercial  organization.  If  it  is  impossible  accurately  to 
reach  credits  of  a  more  definite  nature,  these  evanescent  values  are 
beyond  the  range  of  practical  fiscal  attention,  owing  to  the  impos- 
sibility of  estimate  or  assessment  in  any  workable  form. 

Article  5 — Smnmary. 

A  review  of  credit  property  leads  to  the  following  conclusions  with  refer- 
ence to  its  suitabihty  or  imsuitability  to  form  a  part  in  the  national 
fiscal  structure: 

First,  all  forms  of  credit  must  represent  some  form  of  tangible  prop- 
erty in    order   to  possess  any  tangible  value.      As   the   borrower   is 


Bk.  II  Personal  Property  159 

the  owner  of  the  real  property  and  the  return  to  money  lent  upon  it 
cannot  fall  below  the  average  rate  for  any  length  of  time,  taxes  on 
credits  will  be  borne  by  real  property.  If,  however,  the  real  property 
is  taxed  in  thb  first  place,  credits  should  be  exempt. 

Second,  in  the  case  of  corporate  securities,  it  seems  impossible 
to  reach  the  values  sought  with  any  accuracy  except  through  the 
definite  property  represented.  Taxes  levied  upon  actual  prop- 
erty may  be  distributed  over  the  credits  based  upon  it,  without 
the  taxation  of  a  single  stock  or  bond.  By  far  the  most  effective 
means  of  reaching  property  for  fiscal  purposes  is  to  assess  definite 
things  and  not  their  incorporeal  representations  in  the  form  of 
credits  or  securities.  In  this  way  alone  is  it  possible  to  distribute 
contributions  over  an  entire  system  of  incorporated  certificates  of 
ownership. 

These  considerations  suggest  the  second  class  of  personal  property; 
that  class  including  definite,  material  assets,  such  as  those  against  which 
credits  are  issued. 

Section  V  —  Chattels 

Property  classified  as  chattels  includes  railway  rolling  stock,  furniture, 
crops,  farming,  and  manufacturing  machine  y,  cattle,  general  stock  and 
so  forth.  At  first  sight  this  form  of  property  offers  a  more  definite 
basis  for  fiscal  purposes  than  credits.  Experience  shows,  however, 
that  chattel  property  presents  serious  difficulties  of  valuation,  assess- 
ment and  inequality.  Two  bales  of  goods  lie  side  by  side  in  the  ware- 
house of  a  merchant;  an  expert  might  be  imable  to  distinguish  between 
the  two  without  elaborate  investigation;  yet  these  two  similar  packages 
may  represent  widely  different  values.  In  the  assessment  of  fiscal 
contributions,  the  basis  of  equal  distribution  does  not  lie  in  that  which 
is  taxed  or  not  taxed;  but  in  the  relation  of  the  values  assessed  to  the 
means  of  the  contributors,  both  individually  and  in  relation  to  each 
other.  If  £1,000  is  to  be  assessed  upon  a  community  and  the 
assessment  is  made  upon  values  incapable  of  exact  relative  estimation, 
no  part  of  the  £1,000  will  be  justly  placed.  This  applies  to  the  as- 
sessment of  percentages:  if  the  values  assessed  do  not  bear  a  proper 
relation  to  each  other  throughout  the  entire  community,  every  per- 
centage assessed  will  bear  a  false  relation  to  every  other.  Here  is 
the  inherent  objection  to  taxes  of  this  kind:  the  fact  that  they  present 
no  possibility  of  a  justly  distributed  burden,  owing  to  the  impossi- 


i6o  Direct  Taxation  Pt.  II 

bility  of  the  exact  relative  estimation  of  the  values  upon  which  they 
must  be  assessed. 

By  what  means  can  the  values  of  pictures,  art  objects,  complicated 
machinery,  and  blooded  stock  be  fixed  in  relation  to  each  other  through- 
out any  area  by  different  valuers  unfamiliar  with  the  various  fields, 
when  experts  might  differ  in  their  estimations  both  actually  and  rela- 
tively? How  can  the  rich  gem  collector  be  prevented  from  putting  his 
wealth  out  of  sight  while  the  horse,  the  cow  and  the  machinery  of  the 
farmer  pay  their  full  quota?  By  far  the  greater  values  of  personal 
chattel  property  are  those  disappearing  most  easily  at  the  proper  time, 
and  estimated  both  relatively  and  actually  with  the  greatest  difficulty. 
The  smaller  values,  on  the  contrary,  such  as  common  stock,  crops, 
wagons  and  farm  machinery,  are  more  in  evidence,  and  estimated  as 
full  value  with  relative  ease.  Again,  great  difficulties  are  met  in  con- 
nexion with  such  property  as  the  rolUng  stock  of  railways,  the  mains, 
pipes  and  plants  belonging  to  a  water  or  electric  light  company,  the 
poles  and  wires  of  a  telephone  or  telegraph  system.  The  cost  of  con- 
struction or  replacement  forms  no  standard  of  the  relative  values  at 
which  property  of  this  kind  should  be  assessed.  The  relative  value 
of  such  property  does  not  depend  upon  the  number  of  cars  or  the  length 
of  the  pipes,  but  depends  on  earning  powers;  and  these  earning  powers 
need  have  no  connexion  with  the  quantity  of  steel  or  amount  of  wire 
involved.  Such  earnings  depend  upon  the  distribution  of  goods, 
water,  gas,  or  communication  over  the  various  systems.  Here  lies 
the  true  value  of  such  property;  the  real  wealth  forming  the  basis 
of  the  securities  issued  against  it.  The  most  elaborate  estimates  of 
the  rolling  stock,  plants,  pipes,  or  wires  of  great  public-service  corpora- 
tions form  no  basis  for  valuing  the  wealth  in  franchise  and  security, 
either  actually  or  relatively,  annually  created  by  their  control.  Uni- 
versal experience  shows  that  the  taxation  of  personal  chattel  property 
is  among  the  most  unjust,  annoying  and  least  effective  methods  of 
raising  public  funds  ever  devised.  "The  assumption  that  it  is  necessary 
to  assess  everything,"  says  Mr.  Wells,  ^  "in  order  to  tax  equitably 
involves  an  impossibility,  and  therefore  unavoidable  inefficiency, 
injustice,  and  inequality  in  administration.  .  .  .  the  term  property 
is  made  to  apply  equally  to  entities  and  to  symbols  or  non-entities, 
which  is  in  itself  an  absurdity." 

The  history  of  this  form  of  taxation  in  all  countries  supports  Mr. 

•  Theory  and  Practice  of  Taxation.     D.  A.  Wells,  pp.  394-395. 


Bk.  II  Personal  Property  i6i 

Wells'  position:  "No  man  and  no  corporation,"  says  an  experienced 
assessor^  of  the  State  of  New  York,  "banks  only  excepted,  need  pay 
a  tax  on  personal  property.  Widows  and  orphans  must  pay.  Upon 
them  in  the  extremity  of  their  distress,  the  law  lays  its  heavy  hand.  It 
bereaves  the  bereaved.  Moribund  itself,  it  has  an  affinity  for  the 
effects  of  the  dead.  The  records  of  the  surrogate  furnish  the  schedule, 
and  the  machinery  of  the  law  used  in  adjusting  an  estate  is  not  sufficiently 
flexible  to  regularly  permit  such  a  transfer  of  securities  as  would  insure 
an  exception." 

Section  VI  —  Miscellaneous  Taxes 

Nearly  all  nations  derive  a  portion  of  their  revenue  from  a  variety 
of  miscellaneous  imposts.  Various  forms  of  taxation  may  be  laid  upon 
contracts,  registration,  insurance,  bills,  notes,  acknowledgments  of 
receipt,  and  deeds  of  release.  Taxes  of  this  kind  are  most  effectively 
imposed  through  the  legal  documents  serving  as  evidence  of  the  agree- 
ment. Taxes  on  the  transfer  of  property  of  different  kinds,  and  on  the 
purchase  and  sale  of  land  especially,  may  be  levied  by  means  of  stamps 
or  registration  fees. 

Taxes  of  this  kind  possess  certain  advantages;  they  may  be  assessed 
and  collected  with  ease  and  certainty;  in  proportion  to  the  amount 
produced,  they  involve  little  expense.  They  are,  nevertheless,  open 
to  the  following  objections:  First,  they  fall  upon  capital  and  not 
upon  revenue  —  an  "unthrifty"  form  of  taxation.  Second,  their  in- 
cidence falls  upon  the  contributor  least  subject  to  them;  that  is,  upon 
the  seller;  the  seller  being  in  most  cases  forced  to  sell,  while  the  buyer 
is  less  often  forced  to  buy.  The  considerations  suggested  with  reference 
to  borrower  and  lender  in  the  case  of  mortgages  apply.  Capital  will 
seek  investment  in  other  fields  until  the  return  upon  the  purchase 
involved  is  at  no  disadvantage  with  these;  or,  until  the  tax  is 
shifted  to  the  seller. 

Taxes  on  the  transfer  of  land  present  other  considerations.  It 
may  be  said  in  general  that  taxes  on  the  purchase  and  sale  of  goods 
are  harmful,  in  that  they  throw  obstacles  in  the  way  of  trade.  Taxes 
on  the  transfer  of  land,  however,  are  peculiarly  objectionable  for  other 
reasons.  Land  is  the  most  productive  form  of  property.  The  seller  of 
land  in  most  cases,  through  lack  of  capital,  ability,  or  for  other  reasons, 


>  Mr.  G.  H.  Andrews,  addressing  a  legislative  committee,  October  6,  1874,  cited  by  Mr.  T.  G.  Shear- 
man, Natural  Taxation,  p.  73. 


i62  .  Direct  Taxation  Pt.  II 

is  unable  to  give  the  land  its  greatest  productive  value;  the  purchaser, 
on  the  contrary,  sees  greater  productive  advantages  in  its  use.  Ob- 
stacles placed  in  the  way  of  the  purchase  and  sale  of  land  are,  therefore, 
hindrances  in  the  path  of  the  entire  productive  powers  of  a  people. 

Taxes  on  leases,  which  form  a  direct  discouragement  to  agriculture 
are  of  this  nature.  "The  more  it  costs  to  acquire  any  property,  the 
less  must  be  the  net  value  of  it  when  acquired,"  says  Adam  Smith;i 
and  again,  "All  taxes  upon  the  transference  of  property  of  every  kind,  so 
far  as  they  diminish  the  capital  value  of  that  property,  tend  to  diminish 
the  funds  destined  for  the  maintenance  of  productive  labour.  They  are 
all  more  or  less  unthrifty  taxes  that  increase  the  revenue  of  the  sovereign, 
which  seldom  maintains  any  but  unproductive  labourers,  at  the  expense 
of  the  capital  of  the  people,  which  maintains  none  but  productive." 

Taxes  may  also  be  placed  upon  communication:  letters,  newspapers, 
advertisements,  and  so  forth. 

Postal  rates,  when  service  is  supplied  by  the  administration  at  little 
above  cost,  are  not  a  tax;  but,  if  the  rates  are  increased  until  an  im- 
portant revenue  is  derived,  the  fiscal  character  of  the  service  becomes 
apparent.  Revenue  derived  from  this  source  is  rarely  considered  ad- 
vantageous; it  increases  the  cost  of  business  communication  and  throws 
difficidties  in  the  way  of  commerce.  Taxes  on  advertisements  are 
open  to  the  same  objection;  taxes  on  newspapers,  to  the  more  serious 
one  of  being  a  tax  on  the  most  important  source  of  education  and  in- 
formation of  the  people. 

Taxes  upon  legal  proceedings  are  open  to  the  objection  of  forming  an 
inducement  to  the  extension  and  complication  of  the  process.  They 
are,  as  MilF  says,  little  else  than  a  "tax  on  redress,  and  therefore  a  pre- 
mium on  injury.  ...  In  the  enumeration  of  bad  taxes,  a  conspic- 
uous place  must  be  assigned  to  law  taxes."  In  the  levying  of  such 
taxes  it  is  sometimes  suggested  that  those  who  benefit  by  the  legal  tri- 
bunals should  bear  the  expense  of  their  administration.  It  seems,  how- 
ever, as  Mill  points  out,  that  the  reverse  consideration  is  nearer  the 
truth:  the  fact  that  certain  persons  had  need  to  appeal  to  the  tribunals 
shows  that  it  was  rather  they  who  had  been  least  benefited  by  their 
administration. 

The  revenue  raised  for  local  purposes  in  the  form  of  octroi  duties  is 
but  an  indirect  tax  on  consumption,  and,  as  such,  is  discussed  with  in- 


1  The  Wealth  of  Nations.     Vol.  II..  Bk.   V.,  ch.  ii.,  p.  438. 

»  Principles  of  Political  Economy.     Bk.  V.,  ch.  V.,   §  3  p.  SiQ. 


Bk.  II  Personal  Property  163 

direct  methods  in  general.  The  octroi  duty,  although  properly  speaking, 
neither  import  nor  excise,  is  a  peculiarly  unfair  and  unequal  burden, 
inasmuch  as  the  bulk  of  goods  taxable  in  this  way  forms  the  food  of 
city  populations  and  the  raw  materials  of  manufacture. 

"These  indirect  taxes,"  says  Mill,^  "are  much  more  objectionable 
in  towns  than  on  the  frontier,  because  the  things  which  the  country 
supplies  to  the  towns  are  chiefly  the  necessaries  of  life,  and  the  materials 
of  manufacture,  while  of  what  a  country  imports  from  foreign  countries 
the  greater  part  usually  consists  of  luxuries." 

An  octroi  system  cannot  produce  any  considerable  revenue  without 
pressing  severely  upon  the  poorer  classes  of  the  towns.  The  octroi 
thus  presents  the  irregularities  and  inequalities  of  import  and  excise 
duties  in  an  intensified  form,  as  affecting  the  poorer  portions  of  city 
populations. 

^PrincipUt  0/  Political  Economy.    Bk.  V.,  ch.  v.,  §  4,  P-  S20. 


CHAPTER  II 

REAL  PROPERTY 


Section  I  —  Classification.  Section  II  —  Capital  Value  of  Improve- 
ments. Section  III  —  Capital  Value  of  Land.  Section  IV  — 
Rent  of  Improvements.    Section  V  —  Ground-rent. 


Section  I — Classification 

THE  second  of  the  classes  into  which  general  property  is  divis- 
ible is  real,  or  immovable,  property.  Property  of  this  kind 
is  again  divisible  into  two  classes:  land  and  improvements. 
These  classes,  however,  physically  inseparable,  are  usually 
considered  together  under  the  term  real  estate.  That  land  and  im- 
provements constitute,  however,  two  distinct  forms  of  value  is  evident 
upon  a  moment's  thought.  Land  is  created  by  cosmic  processes 
over  which  the  human  being  has  no  control;  improvements  are  created, 
immediately,  at  least,  by  man.  The  distinction  between  the  two  is 
important  in  any  examination  of  real  property  as  a  source  of  national 
revenue. 

Property  of  this  kind  may  again  be  estimated  in  two  ways:  either  at 
total  capitalization  or  at  its  annual  rental  value.  Real  property, 
therefore,  may  be  considered  under  four  heads:  i,  Capital  value  of 
improvements;  2,  Capital  value  of  land;  3,  Rental  value  of  improve- 
ments;  4,  Rental  value  of  land. 

Section  II — Capital  Value  of  Improvements 

Among  the  most  obvious  forms  of  taxable  property  is  that  of  im- 
provements and  buildings.  Where  such  property  is  taxed,  the  value 
of  the  improvement  is  estimated  and  a  percentage  of  the  total  assessed. 

This  tax  is  practically  a  tax  on  the  improvement  of  land,  and  to  be 
evenly  distributed  it  is  essential  that  all  improvements  should  be 
capable  of  exact  valuation  in  relation  to  each  other.  Attempts  at 
such  relative  valuation  gave  rise  to  the  old  English  custom  of  counting 
the  number  of  hearths  in  a  house,  later  superseded  by  the  more  conven- 

164 


Bk.  II  Real  Property  165 

ient  method  of  counting  the  windows,  number  of  stories,  or  other  means 
of  approximating  its  value  in  relation  to  other  buildings.  In  the  taxation 
of  improvements,  the  ever-present  difficulty  of  exact  valuation  is  met, 
and  as  accurate  relative  estimates  must  form  the  basis  of  any  just  system, 
this  difficulty  is  a  serious  one.     Other  difficulties  may  be  mentioned. 

Taxes  on  improvements  may  fall  largely  or  entirely,  not  upon  the 
owner  of  the  improvement,  for  whom  they  are  intended,  but  upon  the 
tenant.  This  seems  to  apply  in  particular  where  improvements  are 
represented  by  larger  investments  in  buildings,  houses,  warehouses, 
factories  and  so  forth.  If  capital  employed  in  these  investments  could 
be  taxed,  so  that  its  returns  were  less  than  the  possibilities  offered  by 
other  forms  of  employment,  no  more  capital  would  seek  such  channels. 
The  fact,  however,  that  capital  flows  in  these  directions  suggests  that 
such  capital  is  no  more  effectively  reached  in  the  majority  of  cases, 
than  the  average  of  capital  employed  in  other  fields. 

If,  however,  a  tax  of  this  kind  could  be  made  effective,  that  is,  if 
capital  employed  in  the  improvement  of  land  could  be  taxed  in  pro- 
portion to  the  value  of  improvements,  such  a  tax  would  be  of  disad- 
vantage to  the  community;  for  it  would  restrict  and  destroy  the  most 
productive  of  all  activities:  the  improvements  of  land. 

Improvements  of  this  kind  are  but  chattels  attached  to  the  soil, 
and  many  considerations  suggested  in  the  study  of  chattels  in  general 
apply  to  the  improvements  of  land.  Buildings,  houses,  and  improve- 
ments cannot  be  hidden  or  moved  from  place  to  place;  but  their  number 
and  quality  may  be  adversely  affected  by  taxation,  while  the  great 
difficulty  of  exact  relative  valuation  is  always  present. 

If  such  methods  really  place  the  intended  burden  upon  the  owners  of 
improvements,  the  result  will  be  to  restrict  the  productive  powers  of 
the  society;  if  the  burden  is  shifted  to  others,  the  property  assessed 
contributes  nothing,  and  the  tax  may  act  in  many  cases  as  an  indirect 
tax  on  consumption  or  living  expenses,  instead  of  a  direct  contribution 
from  real  property.  On  the  other  hand,  improvements  present  great 
advantages  over  ordinary  movable  chattels,  as  a  source  of  revenue, 
the  chief  of  which  are  their  relative  availability  and  the  slight  expense 
involved. 

Section  III  —  Capital  Value  of  Land 

The  capital  value  of  land  presents  another  obvious  source  of  social 
revenue,  and  has  formed  one  of  the  oldest  objects  of  taxation.    Land, 


i66  ^  Direct  Taxation  Pt.  II 

as  a  basis  for  social  contribution,  possesses  peculiar  advantages  presented 
by  no  other  form  of  property.  Land  cannot  be  hidden,  as  can  valuable 
chattels;  it  cannot  be  moved,  transferred  or  held  in  different  neigh- 
bourhoods, as  can  securities;  its  quantity  cannot  be  restricted  or  di- 
minished, as  in  the  case  of  houses  and  improvements;  its  amount  may 
be  estimated  with  almost  ideal  precision,  and  the  relative  value  of 
different  holdings  thus  much  more  closely  approximated  than  in  any 
other  form  of  property.  Again,  the  value  of  the  situation  of  land  cannot 
be  deteriorated  to  any  extent  by  the  owner,  as  is  possible  in  the  case 
of  improvements;  for  to  do  so  would,  in  the  majority  of  cases,  decrease 
rather  than  increase  his  revenue.  The  extent  of  land  areas  may  be 
accurately  calculated  and  their  value  approximated  independently  of 
interested  testimony,  thus  doing  away  with  the  otherwise  inevitable 
premium  upon  fraud.  These  qualifications  are  possessed  in  the  same 
degree  by  no  other  element  of  wealth. 

In  order  to  assess  the  total,  or  capitalized,  value  of  land,  surveys 
must  be  made  with  estimates  of  the  relative  value  of  its  component 
parts.  A  tax  of  this  nature,  upon  the  total  value  of  land,  falls  upon 
rent  to  a  certain  extent,  but  only  to  a  certain  extent;  for,  unless  the  land 
is  revalued  every  time  the  tax  is  imposed,  the  contribution  will  not 
vary  in  proportion  to  the  rental  value,  the  tax  remaining  a  fixed  quantity 
as  established  in  relation  to  the  value  of  the  land  at  a  definite  time. 
The  value  of  the  land  will,  of  course,  vary  with  changing  conditions, 
the  value  of  the  different  portions  will  vary  actually  and  in  relation  to 
each  other.  A  fixed  contribution,  based  upon  the  capitalized  value  of 
land,  therefore,  however  just  at  the  time  of  assessment,  becomes  less 
so  with  every  alteration  in  value  within  the  area  considered.  A  tax 
of  this  kind  is  called  an  invariable  land-tax  and  has  played  an  important 
part  in  fiscal  history. 

Taxes  may  be  payable  in  different  forms  of  wealth:  the  produce  of 
land,  military  service,  in  various  forms  of  obligations,  and  in  coin  of 
the  realm.  For  modern  administrative  purposes,  contributions  to 
the  public  treasury  are  nearly  always  estimated  in  money,  and  this 
money  has  a  certain  relation  to  the  value  of  gold.  A  fixed  land-tax, 
therefore,  is  open  to  two  objections:  it  will  vary  with  the  value  of  the 
different  portions  of  the  land,  both  actually  and  relatively;  and  again, 
with  the  variations  of  the  gold,  money,  or  wealth  in  which  it  is  payable. 
A  tax  of  this  nature  must,  therefore,  be  relatively  variable,  subject, 
as  it  is,  to  changing  influences. 


Bk.  II  Real  Property  167 

A  contribution  of  £10  annually  from  a  certain  property  may  become 
a  lighter  or  heavier  burden  as  the  value  of  the  property  rises  or  falls, 
and  with  changes  in  the  value  of  money.  The  rental  value  of  the  property 
might  increase  or  decrease  indefinitely;  the  value  of  gold  might  change 
in  its  relation  to  consumable  wealth;  all  of  these  variations  would  have 
a  marked  effect,  both  upon  the  burden  borne  by  the  property,  and  the 
revenue  obtained  by  the  State.  This  variable  nature  of  the  fixed 
land-tax  is  a  serious  objection;  although  such  a  tax  as  applied  to  the 
land  possesses  marked  advantages. 

"A  land-tax,"  says  Adam  Smith,  ^  "which,  like  that  of  Great  Britain, 
is  assessed  upon  each  district  according  to  a  certain  invariable  canon, 
though  it  should  be  equal  at  the  time  of  the  first  establishment,  neces- 
sarily becomes  unequal  in  the  process  of  time,  according  to  the  unequal 
degrees  of  improvement  or  neglect  in  the  cultivation  of  the  different 
parts  of  the  country.  .  .  .  This  tax,  therefore,  so  far  offends  against 
the  first  of  the  four  maxims  above  mentioned.  It  is  perfectly  agree- 
able to  the  other  three." 

These  considerations  apply  to  contributions  assessed  upon  land  and 
improvements  combined.  In  so  far  as  such  a  tax  falls  upon  improvements 
it  is  open  to  the  objections  mentioned.  In  so  far  as  it  falls  upon  the 
value  of  the  land,  it  possesses  the  advantages  with  the  disadvantages 
pointed  out. 

In  connexion  with  a  land-tax,  however,  a  new  form  of  property  appears 
an  element  of  wealth  presenting  important  distinctions  separating  it 
from  other  forms  considered.  This  element  of  wealth  is  the  value 
attaching  to  land  irrespective  of  improvements;  that  is,  the  value 
inherent  in  land  considered  apart  from  the  value  of  labour  applied  to 
it.  This  new  element  may  be  examined,  therefore,  in  reference  to  its 
qualifications  as  a  source  of  revenue. 

Taxes,  if  paid,  must  fall  somewhere;  are  borne  by  some  form  of 
property,  sooner  or  later.  Taxes  on  commodities  nearly  always  fall 
upon  consumers.  Taxes  falling  entirely  on  trade  are  paid  out  of  the 
profits  of  the  traders.  Taxes  assessed  upon  the  owners  of  houses  fall 
upon  tenants  in  the  majority  of  cases,  and  taxes  on  credits  usually  fall 
upon  debtors  when  collected.  It  may  be  asked,  upon  what  form  of 
wealth  does  a  tax  fall,  assessed  upon  the  value  of  unimproved  land? 
Such  a  tax,  properly  assessed,  should  not  affect  human  industry  in 
connexion  with  improvements,  for  no  value  represented  by  them  is  laid 

»  Th4  Wealth  of  Nations.     Book  V.,  ch.  ii.,  Part  II,  Art.  i,  p.  417. 


i68  Direct  Taxation  Pt.  II 

under  contribution.  Contribution  from  unimproved  land  regards  the 
land  as  freed  from  the  results  of  human  effort;  it  considers  the  land  in  its 
natural  condition,  and  estimates  value  as  affected  by  social,  not  in- 
dividual, causes. 

The  land,  in  its  unimproved  state,  is  untouched  by  the  hand  of  man; 
that  is,  free  from  the  results  of  labour.  The  unimproved  value  of 
those  portions  of  the  surface  of  the  earth,  upon  which  great  populations 
exist,  is  caused  by  the  existence  of  those  populations.  It  represents  neither 
labour,  capital,  skill,  credit  nor  industry,  in  any  individual  or  corporate 
form.  It  does  represent,  however,  the  combined  number,  wealth, 
industrial  powers,  and  productive  energies  of  a  population  existing  upon 
a  given  portion  of  the  earth  at  a  given  time;  and  to  these  in  their  col- 
lective sense  is  due  the  value  possessed  by  unimproved  land.  This 
value,  moreover,  created  by  a  society,  as  a  society,  is  a  form  of  wealth 
belonging  peculiarly  to  the  social  organization.  Revenue,  therefore, 
derived  from  the  unimproved  value  of  land  is  derived  from  wealth 
created  by  society  and  belonging  to  it  in  its  collective  sense;  and  not 
from  wealth  created  by  individuals  or  belonging  to  them.  Fiscal  contri- 
butions, properly  levied  through  the  medium  of  unimproved  land 
fall,  apparently,  upon  socially  created  wealth  without  infringing  upon 
indi\ddual  or  corporate  wealth.  Regarded,  therefore,  in  relation  to 
other  forms  of  property,  as  a  source  of  social  revenue,  the  value  of 
unimproved  land  presents  exceptional  advantages.  It  presents, 
at  the  same  time,  however,  an  important  difficulty:  variability, 
for  relative  and  actual  variations  create  important  inequalities  in  inci- 
dence. 

The  variability  in  the  values  of  real  property  suggests  another  method 
of  estimation  and  assessment.  Rentals,  it  may  be  said,  form  an  exact, 
self-regulating  register  of  values,  and,  therefore,  contributions  levied 
upon  rentals  are  not  open  to  objections  met  in  a  fixed  house  or  land- 
tax.  Rentals  represent  the  annual  value  of  the  capital  invested, 
and  a  contribution  assessed  upon  rent  not  only  estimates  the 
property  at  its  actual  value,  but  varies  with  this  value  and  es- 
tablishes it  in  relation  to  other  values  at  the  same  time:  rent  serving 
to  measure  and  register  automatically  these  important  factors  in  fiscal 
requirements. 

Another  fiscal  resource  is  thus  reached:  one  assessed  upon  rental,  or 
annual  value,  rather  than  upon  total,  or  capital,  value.  The  rental 
value  of  real  property  may  be  assessed  in  two  ways;  the  rent  of  improve- 


Bk.  II  Real  Property  169 

ments  and  the  rent  of  land  presenting  two  distinct  values  which  may  be 
assessed  separately  or  in  combination.  The  rent  of  real  estate  is  thus 
divisible  into  improvement  rent  and  ground-rent;  the  incidence  of  a 
tax  upon  rent  in  general,  therefore,  is  twofold  and  these  two  sources 
must  be  considered  separately. 

Section  IV —  Rent  of  Improvements 

If  profits  of  buildings  and  improvements,  as  expressed  in  rent,  were 
lowered  by  fiscal  pressure,  capital  would  flow  into  other  channels  and 
only  the  most  profitable  improvements  would  be  developed.  It  seems, 
therefore,  that  the  portion  of  a  tax  assessed  upon  building  or  improve- 
ment rent  falls  eventually  upon  the  tenant,  or  consumer  of  the  im- 
provement. 

A  large  portion  of  social  revenue,  assessed  upon  the  rent  of  improve- 
ments, is  derived  from  the  rent  of  houses,  and  contributions  raised 
from  this  source  present  advantages  over  other  forms  of  revenue.  The 
impossibility  of  hiding  houses,  or  holding  them  outside  the  taxing  area, 
combined  with  the  estimates,  actual  and  relative,  rendered  by  rental 
values,  are  important  in  this  connexion.  The  fact  that  rent,  in  its 
action,  eliminates  difficulty  with  regard  to  actual  and  relative  estimates, 
renders  this  source  the  most  equal  yet  discussed.  Mill  and  Adam  Smith 
unite  in  their  approval  of  a  tax  on  the  rent  of  houses.  Says  the  latter :i 
"In  general,  there  is  not  perhaps  any  one  article  of  expense  or  con- 
sumption by  which  the  liberality  or  narrowness  of  a  man's  whole  ex- 
pense can  be  better  judged  of  than  by  his  house  rent.  A  proportional 
tax  upon  this  particular  article  of  expense  might,  perhaps,  produce  a 
more  considerable  revenue  than  any  which  has  hitherto  been  drawn 
from  it  in  any  part  of  Europe." 

MilF  says  speaking  of  this  tax:  "In  so  far  as  it  falls  on  the  occupier, 
if  justly  proportioned  to  the  value  of  the  house,  it  is  one  of  the  fairest 
and  most  unobjectionable  of  all  taxes.  ...  A  house-tax  is  a 
nearer  approach  to  a  fair  income-tax,  than  a  direct  assessment  on  in- 
come can  easily  be." 

The  advantage  of  a  tax  of  this  nature  is  the  accuracy  with  which 
rent  serves  as  a  basis  of  proportionate  estimates;  registering  values, 
as  it  does,  actually  and  in  relation  to  each  other  at  the  same 
time.     The  chief  disadvantage  of  such  a  tax  is  the  inequality  with 


>  The  Wealth  of  Nations.     Bk.  V.,  ch.  ii.,  p.  435. 

•  Principles  of  Political  Economy.     Bk.  V.,  ch.  iii.,  §  6,  p.  502. 


170  Direct  Taxation  Pt.  II 

which  it  falls  upon  owner  and  occupier,  for  the  owner  is  not  propor- 
tionately reached. 

Section  V  —  Ground-rent 

The  remaining  form  of  rent  is  the  annual  value  of  land  independent 
of  improvements.  The  study  of  this  form  of  property,  in  the  light  of 
earlier  considerations,  and  in  relation  to  other  forms  of  taxable  wealth, 
brings  a  combination  of  these  into  view.  In  an  examination  of  assess- 
ments upon  real  property,  land  offered  the  greater  number  of  advan- 
tages; when  the  land  was  regarded  as  separate  from  improvements, 
the  residting  value  presented  a  form  of  wealth  not  traceable  to  individual 
endeavour,  but  to  the  society  as  a  whole,  as  the  source  of  its  existence. 
This  value,  therefore,  seemed  a  peculiarly  suitable  source  from  which 
social  needs  might  be  supplied.  A  difficulty  appeared:  the  variable 
nature  of  the  values  considered.  This  difficulty  disappears,  however, 
if,  instead  of  capital  values,  annual  values  derived  from  these  are  con- 
sidered. The  advantages  of  land,  as  a  source  of  revenue,  with  the 
advantages  offered  by  rent,  as  a  means  of  registering  values,  are  com- 
bined in  this  way.  It  seems,  in  fact,  that  in  the  combination  of  un- 
improved land  and  rent,  a  form  of  property  is  met,  presenting  exceptional 
conditions  as  a  subject  for  fiscal  attention. 

A  method  of  supplying  social  needs,  which  only  touches  socially  created 
wealth,  cannot  have  escaped  the  attention  of  the  abler  economists. 
"Groimd  rents,"  says  Smith,  ^  "are  a  still  more  proper  subject  of  tax- 
ation than  the  rent  of  houses.  A  tax  upon  ground  rents  would  not 
raise  the  rent  of  houses.  It  would  fall  altogether  upon  the  owner 
of  the  ground  rent,  who  acts  always  as  a  monopolist,  and  exacts  the 
greatest  rent  which  can  be  got  for  it.  .  .  .  Ground  rents  seem,  in  this 
repect,  a  more  proper  subject  of  peculiar  taxation  than  even  the 
ordinary  rent  of  land.  The  ordinary  rent  of  land  is,  in  many  cases, 
owing  partly  at  least  to  the  attention  and  good  management  of 
the  landlord.  A  very  heavy  tax  might  discourage  too  much  this  at- 
tention and  good  management.  Ground  rents,  so  far  as  they  exceed 
the  ordinary  rent  of  land,  are  altogether  owing  to  the  good  government 
of  the  sovereign,  which,  by  protecting  either  the  industry  of  the  whole 
people,  or  of  the  inhabitants  of  some  particular  place,  enables  them  to 
pay  so  much  more  than  the  real  value  of  the  ground  which  they  build 


>  The  Wealth  of  Nations.     Bk.  V.,  ch.  ii.,  pp.  436-437- 


Bk.  II  Real  Property  171 

their  houses  upon;  or  to  make  to  its  owner  so  much  more  than  compen- 
sation for  the  loss  which  he  might  sustain  by  this  use  of  it.  Nothing 
can  be  more  reasonable  than  that  a  fund  which  owes  its  existence  to 
the  good  government  of  the  State  should  be  taxed  peculiarly,  or  should 
contribute  something  more  than  the  greater  part  of  other  funds,  toward 
the  support  of  that  government." 

After  pointing  out  that  the  predominant  element  of  rent  in  large 
cities  is  usually  that  paid  for  the  use  of  land,  MilF  says:  "Among  the 
very  few  kinds  of  income  which  are  fit  subject  for  peculiar  taxation, 
these  ground-rents  hold  the  principal  place,  being  the  most  gigantic 
example  extant  of  enormous  accessions  of  riches  acquired  rapidly, 
and  in  many  cases  unexpectedly,  by  a  few  families  from  the  mere  ac- 
cident of  their  possessing  certain  tracts  of  land,  without  their  having 
themselves  aided  in  the  acquisition  by  the  smallest  exertion,  outlay, 
or  risk.  So  far,  therefore,  as  the  house-tax  falls  on  the  ground-landlord, 
it  is  liable  to  no  valid  objection." 

These  two  economists  unite  in  regarding  a  tax  on  the  rent  of  un- 
improved land  as  the  best  of  all  sources  of  social  revenue:  "Among  the 
very  few  kinds  of  revenue  which  are  fit  subject  for  peculiar  taxation," 
says  one.  "Ground-rents  seem,  in  this  respect,  a  more  proper  subject 
of  peculiar  taxation  than  even  the  ordinary  rent  of  land,"  says  the  other. 

The  three  productive  sources  of  private  revenue  are  rent,  profits, 
and  wages.  Rent  is  of  two  kinds:  improvement  rent  and  ground- 
rent.  The  distinction  between  tax  upon  ground-rent  and  a  tax  upon 
the  rent  of  improvements  is  important. 

The  annual  value  of  a  portion  of  land,  independent  of  improvements, 
is  due  to  the  profit  to  be  derived  from  its  use ;  through  its  proximity  to 
harbour,  markets,  railway,  or  mineral  wealth,  in  relation  to  centres  of 
population.  These  profits  determine  the  rental  value  of  the  land,  or 
the  price  the  tenant  is  willing  to  pay  for  its  use.  Ground-rent,  therefore, 
is  directly  dependent  upon  profits.  Profits,  however,  will  be  dependent 
upon  something  else  —  the  consuming  power  of  the  people  at  large,  or 
upon  the  return  to  productive  occupation,  or  wages,  in  the  broadest 
sense  of  the  term.  Thus  rent,  derived  from  the  ownership  of  unimproved 
land,  takes  its  rise  from  improvement  rent,  profits,  and  wages  combined; 
or  from  the  productive  energies  of  the  society  as  a  whole,  and  repre- 
sents, not  rent  alone,  but  a  value  combining  all  three  sources  of  revenue. 
A  tax,  therefore,  upon  ground-rent  seems  to  reach  all  three  sources  of 

'  Principles  of  Political  Economy.    Bk.  V.,  ch.  iii,  §  6,  p.  502. 


172  Direct  Taxation  Pt.  II 

revenue  in  proportion  to  their  amount.  An  analogous  train  of  reason- 
ing does  not  seem  available  with  reference  to  improvement  rent;  for 
the  reason  that  improvement  rent  is  due  to  individual  initiative;  if, 
therefore,  this  rent  is  reached  by  a  tax,  a  disproportionate  burden  is 
placed  upon  it;  if  the  tax  is  shifted  to  tenant,  a  disproportionate  burden 
is  placed  upon  profit  and  wages. 

These  considerations  suggest  that  a  tax  on  ground-rent  conforms  to 
the  first  principle  laid  down  by  Adam  Smith,  stating  that  individuals 
should  contribute  "in  proportion  to  their  respective  abilities."  As 
their  abiUties  are  measured  by  their  revenues,  in  the  form  of  improve- 
ment rent,  profit,  and  wages,  and,  as  ground-rents  are  proportionate  to 
these,  a  tax  proportionate  to  ground-rents  seems  "proportionate  to  their 
abilities." 

The  second  principle  states  that  a  tax  should  be  "certain  and  not 
arbitrary."     Ground-rents  seem  to  meet  this  condition  automatically. 

The  third  principle  states  that  a  tax  should  be  payable  at  the  time 
most  convenient  for  the  contributor.  A  tax  upon  ground-rents  may 
easily  be  regulated  to  suit  this  maxim. 

The  fourth  principle  shows  that  a  tax  should  "take  and  keep  out  of 
the  pockets  of  the  people  as  little  as  possible  over  and  above  what  it 
brings  into  the  treasury  of  the  State."  A  tax  levied  upon  ground-rent 
offers  exceptionally  inexpensive  methods  of  assessments  and  collection. 

"Both  ground  rents  and  the  ordinary  rent  of  land,"  says  Smith,^ 
"are  a  species  of  revenue  which  the  owner,  in  many  cases,  enjoys  with- 
out any  care  or  attention  of  his  own.  Though  a  part  of  this  revenue 
should  be  taken  from  him  in  order  to  defray  the  expenses  of  the  State,  no 
discouragement  will  thereby  be  given  to  any  sort  of  industry.  The 
annual  produce  of  the  land  and  labour  of  the  society,  the  real  wealth 
and  revenue  of  the  great  body  of  the  people,  might  be  the  same  after  such 
a  tax  as  before.  Ground  rents,  and  the  ordinary  rent  of  land,  are  there- 
fore, perhaps,  the  species  of  revenue  which  can  best  bear  to  have  a 
peculiar  tax  imposed  upon  them." 

»  The  Wealth  of  Nations.     Bk.  V..  ch.  ii.,  p,  437. 


CHAPTER  III 

COMPARATIVE  CLASSIFICATION  OF  THE  SOURCES  OF  SOCIAL  REVENUE 

A    COMPARISON  of  the  most  important  sources    from  which 
/%       revenue  may  be  derived  permits  their  classification  with  ref- 
/     %     erence   to   the   principles  of  Adam  Smith.     Unfortunately, 
neither  Smith  nor    Mill   has   arranged  such  a  comparative 
scale  of   taxable  property.     As  the  preceding   review,  however,  has 
closely  followed  their  thought,  it  is  not  unreasonable  to  believe,  had 
any  such  scale  been  prepared  by  either,  that  it  would  not  have  differed 
materially  from  the  one  presented.     Passages  from  their  works  have 
been  cited  in  support  of  such  a  position.     Apart,  however,  from  discus- 
sion of  the  relative  merits  of  other  sources  of  revenue,  they  both  give 
the  first  place  in  justice  and  equality  to  unimproved  land  rentals. 

SOURCES  OF  PUBLIC  REVENUE  IN  ORDER  OF  EQUITY  AND  ECONOMY 

I.     Direct  taxes  on  ground-rents,  or  on  the  annual  value  of  unim- 
proved land. 
II.     Direct  taxes  on  the  rent  of  real  estate,  or  on  the  rent  of  land 
and  improvements  combined. 

III.  Direct  taxes  on  the  rent  of  improvements:  houses,  buildings, 

plants,  and  so  forth. 

IV.  Direct  taxes  in  any  form  not  included  in  the  above:  inherit- 

ance, income,  and  so  forth. 
V.    Indirect  taxes  on  consumption  for  revenue:  import  and  excise 

duties,  octroi,  stamps. 
VI.     Indirect   protective  taxes  of  whatever   nature:  tariff- weapon, 
balance  of  trade,  protection  of  industry,  labour,  and  so  forth. 

The  word  "tax"  is  used  in  reference  to  many  functions  of  an  impost 
which,  in  any  proper  sense  of  the  word,  are  not  taxes  at  all.  That 
which  constitutes  a  good  tax,  in  the  legitimate  sense,  is  the  ability  of 
the  measure  to  satisfy  the  fiscal  needs  of  the  society  justly  and  inex- 
pensively.    A  tax,  as  a  tax,  neither  has  nor  should  have  any  other 

173 


174  Direct  Taxation  Pt.  II 

purpose.  In  so  far  as  its  qualifications  for  the  production  of  revenue 
are  subordinated  to  other  functions  does  it  become  an  imposition, 
supported  by  the  powers  of  the  State  subject  to  manipulation  in  con- 
nexion with  interests  coming  under  its  influence. 

Here  occurs  a  significant  question  in  connexion  with  fiscal  methods; 
one  to  which  little  attention  has  been  paid,  either  by  economists  or 
in  the  practical  application  of  fiscal  systems.  The  question  is:  If  a 
certain  source  of  social  revenue  is  recognized  as  the  best  of  all  sources, 
to  what  extent  should  that  source  be  used  in  supplying  the  social  needs? 
If,  for  example,  experience  and  recognized  opinion  unite  in  demonstrat- 
ing the  income  tax  to  be  the  best  and  fairest  of  taxes,  to  what  extent 
should  social  revenue  be  raised  from  incomes?  If  the  assessment  of 
individual  income  is  the  best  and  least  expensive  method  of  raising 
5  per  cent  of  the  social  requirements,  why  is  not  this  same  method 
the  best  for  raising  lo  per  cent?  But,  if  best  for  lo  per  cent,  why  not 
for  one  half  or  the  whole?  If  any  given  source  is  the  best  from  which 
to  derive  5  per  cent  of  social  needs,  it  seems  the  best  from  which 
to  derive  the  entire  amount  required;  the  amount  derived  not  affecting 
the  source,  which  must  apparently  remain  the  best  until  exhausted. 

Or  again,  if  any  given  tax  produces  a  certain  quantity  of  revenue 
in  the  best  and  fairest  manner,  the  question  arises,  to  what  extent 
should  the  resources  of  the  tax  be  used?  Should  but  5  per  cent  of  its 
revenue-producing  capacity  be  employed  for  social  purposes,  and  the 
remainder  of  the  revenue  raised  by  less  advantageous  means?  Should 
but  10  per  cent  of  its  capacity  be  used?  It  is  evident  that  a  train  of 
thought  analogous  to  the  preceding  is  suggested;  and  that,  if  a  tax 
produces  a  given  percentage  of  social  revenue  in  the  best  manner,  no 
other  tax  could  meet  the  social  requirements  as  well  until  this  best  of 
sources  is  exploited.  Not  5  nor  50  per  cent  of  the  possibilities  of  such 
a  tax,  therefore,  should  be  realized  before  other  sources  are  touched; 
but  TOO  per  cent  of  its  powers  should  apparently  be  used  by  the  society 
before  other  methods  are  adopted.  If  the  best  source  is  incapable  of 
supplying  the  entire  needs  of  the  society,  this  best  of  sources  should  first 
be  exhausted  when  the  next  best  method  should  be  determined  and 
exhausted  in  turn. 

To  what  conclusions  these  considerations  lead,  is  evident.  Ground- 
rents,  of  the  annual  values  of  unimproved  land,  are,  in  the  opinion  of  the 
two  greatest  economic  thinkers,  the  best  sources  from  which  a  society 
may  derive  its  revenue.    In  actual  practice,  the  rent  of  unimproved 


Bk.  II  Classification  of  Sources  of  Revenue  175 

land  presents  many  advantages  over  other  methods  of  supplying  such 
revenue.  The  question  is,  then,  whether  social  revenue  would  not  be 
most  satisfactorily  derived  entirely  from  unimproved  land  values?  Or, 
if  these  values  are  insufficient  to  produce  the  entire  revenue,  whether 
this  best  of  sources  should  not  be  used  as  far  as  possible  before  others 
are  touched?  A  science  of  fiscal  method,  if  there  is  ever  to  be  such  a 
thing  in  human  affairs,  would  seem  to  consist  in  the  classification  of 
the  chief  sources  of  social  revenue,  in  reference  to  justice  and  fiscal 
advantage  alone,  and  the  adoption  and  exhaustion  of  the  best  available 
in  succession. 

A  more  or  less  familiar  fiscal  policy  is  here  suggested.  It  is  known  as 
the/'Taxation  of  Land  Values,"  "The  Single  Tax,"  or  "ITmpot  Unique" 
of  the  French  writers  of  the  seventeenth  and  eighteenth  centuries.  This 
policy  first  appeared  some  hundreds  of  years  ago  in  the  works  of  that 
body  of  men  in  France  known  as  the  Economists  or  the  Physiocrats, 
and  is  associated  with  the  names  of  Quesnay,  Turgot,  Le  Trosne,  Dupont 
de  Nemours  and  others.  It  has  been  familiar  in  England  for  years, 
and  in  America  is  chiefly  associated  with  the  names  of  Henry  George 
and  T.  G.  Shearman, 

The  suggestion  of  deriving  the  entire  social  revenue  from  the  value 
of  unimproved  land  is  radical;  and  whatever  advantages  it  may 
possess  from  an  economic  or  academic  point  of  view  should  never 
outweigh  the  disadvantages  with  which  it  might  be  involved  from  other 
points  of  view.  For  reasons  presented,  however,  the  subject  seems 
worthy  discussion;  the  evident  theoretic  advantages  presented  are  so 
great  that  it  may  be  of  interest  to  weigh  these  in  relation  to  some  of 
the  many  questions  and  objections  which  any  such  policy  may  involve. 
In  application,  difficulties,  objections,  and  disadvantages  crowd  upon 
the  mind  in  great  numbers. 

The  first  question  is,  naturally,  whether  the  annual  undeveloped  value 
of  land  may  be  considered  great  enough  to  bear  the  burden  of  the  admin- 
istrative expenses  of  a  nation.  The  attention  then  turns  to  the  changes, 
desirable  or  the  reverse,  to  be  expected  or  feared  from  so  radical  a  modifi- 
cation of  accepted  methods.  The  effects  of  such  a  system  upon  social 
and  industrial  conditions  are  suggested,  together  with  its  effects  upon 
labour,  capital,  railways,  money,  franchises,  and  corporate  wealth.  Can 
the  State  justly  impose  such  burdens  upon  property,  protected  and 
regarded  as  individual  wealth  for  generations?  The  effects  of  such  a 
system  upon  trade,  markets,  and  international  relations,  progressive 


176  Direct  Taxation  Pt.  II 

society  in  its  various  aspects,  and  upon  social,  municipal,  and  juris- 
prudential problems  are  but  few  of  the  questions  arising  in  the  study 
of  such  fundamental  change  of  existing  systems. 

The  third  portion  of  the  present  inquiry  is  devoted  to  the  discussion 
of  these  and  alHed  problems.  As  that  form  of  wealth  represented 
in  unimproved  values  seems  due  to  natural  causes,  the  revenue  derived 
from  it  has  been  regarded  as  the  natural  revenue,  and  the  problems 
suggested  are  reviewed  under  the  title  of  "  The  Natural  Tax." 


Part  III 

THE  NATURAL  TAX 


BOOK  I 
THE  VALUE  OF  THE  LAND 

BOOK  II 
THE  TRANSITION 

BOOK  III 
INCIDENCE  OF  TAXATION,  INDIRECT  AND  DIRECT 

BOOK  IV 
FISCAL  PROBLEMS 


"Book  I 

THE   VALUE   OF  THE   LAND 
CHAPTER  I 

DIFFICULTIES   IN   DIRECT   TAXATION   OF   LAND   VALUES 

A  STUDY   of  the  chief  sources  of  social  revenue  suggests  the 
following  positions: 
I.  The  existence  of  any  society  upon  a  given  portion  of 
the  earth  is  the  origin  of  the  value  of  the  land  occupied 
by  that  society. 

2.  This  value,  created  by  the  society  as  a  whole,  seems  to  belong  to 
the  society  as  a  whole. 

3.  This  value  is  represented,  and  its  relative  variations  periodically 
registered,  in  the  annual  value  of  the  unimproved  land,  or  ground-rents. 

4.  Social  revenue,  derived  from  this  source,  seems  to  be  derived 
from  wealth  created  by  society. 

5.  Consequently,  there  seems  reason  to  regard  the  rent  of  unim- 
proved land  as  the  source  best  suited  to  supply  social  needs. 

The  question  then  arises  whether  the  best  sources  of  revenue  should 
not  be  used  to  their  fullest  capacity  before  less  advantageous  means 
are  adopted.  If  so  it  follows:  either  that  all  social  revenue  should  be 
derived  from  the  values  of  unimproved  land,  or  that  these  values  should 
be  used  as  far  as  possible  in  meeting  social  requirements  before  other 
sources  are  touched. 

Both  these  conclusions,  however,  are  at  variance  with  existing  fiscal 
systems,  in  theory  as  well  as  in  practice,  and  may  be  regarded  as  of 
questionable  value.  Again,  it  may  seem  that  a  society,  founded  at 
its  origin  upon  such  principles,  might  have  adopted  more  or  less  ad- 
vantageous methods;  but  that  the  societies  of  to-day,  founded  upon  rad- 
ically distinct  conceptions,  do  not  present  a  field  suited  to  their 
application.  It  may  also  be  questioned  whether  the  value  of  unim- 
proved land  presents  a  fund  sufficient  to  bear  such  requirements;  and 
whether  in  its  absorption  by  society,  social  conditions  would  not  be 
generated,  creating  results  ultimately  disadvantageous. 

179 


i8o  The  Value  of  the  Land  Pt.  Ill 

These  more  or  less  general  considerations  again  resolve  themselves  into 
a  variety  of  specific,  and  practical  objections  and  difficulties,  occurring  in 
great  numbers,  as  different  phases  of  the  subject  are  examined.    The  most 
important  may  perhaps  be  included  under  the  following  headings: 
/.     The  Value  of  the  Land. 
Is  the  rental  value  of  land,  irrespective  of  improvements,  sufficiently 
great  to  bear  the  assessment  of  the  entire  social  revenue,  or  of  any  material 
portion  thereof?    In  other  words,  what  is  the  relation  of  the  annual 
value  of  unimproved  land  to  annual  social  revenue? 
//.     The  Transition. 
Is  there  any  method  possible  by  means  of  which  a  transition  could  be 
effected  from  indirect  to  direct  taxation  without  more  than  compensating 
danger  to  industrial  and  financial  conditions? 
///.    Confiscation  and  Compensation. 
Is  society  justified  in  absorbing  for  social  needs  property  which  it  has  long 
regarded  as  private,  and  protected  in  individual  possession?    If  so,  should 
the  owners  of  such  property  receive  compensation  and  to  what  extent? 

IV.  The  Establishment  of  Land  Values. 

Is  the  separation  of  the  values  of  landandimprovementspracticallypos- 
sible  with  accuracy  sufficient  to  form  the  basis  of  a  workable  fiscal  system? 

V.  Can  the  Tax  Be  Transferred? 

Is  it  possible  to  shift  the  incidence  of  a  direct  tax  on  land  values  from 
land-owner  to  tenant  or  consumer  through  proportionally  increased  rentals 
and  prices;  thus  exempting  land  values  from  actual  contribution, although 
serving  as  the  channel  through  which  revenue  is  derived. 

VI.  The  Incidence  of  the  Tax. 

Upon  what  class  would  the  burden  of  such  a  tax  fall  compared 
with  existing  methods? 

VII.  Labour, 

The  effects  of  a  direct  system  upon  labour  with  reference  to  existing 
Protection. 

VIII.  Railways. 
IX.    Money. 

X.    Property. 
XI.    Progress. 
XII.    Ethical  Significance. 
These  headings  include,  perhaps,  the  most  important  questions  and 
difficulties  suggested  in  the  study  of  a  fiscal  system  based  upon  un- 
improved land.    To  these,  therefore,  the  attention  may  be  directed. 


CHAPTER  II 


LAND   VALUES 


Section  I — General  Considerations.    Section  II — Method  of  Estimation. 
Section  III — Estimates. 


Section  I  —  General  Considerations 

IN  ORDER  to  discover  to  what  extent  the  value  of  unimproved 
land  may  serve  as  a  fiscal  basis,  it  is  essential  to  estimate  the 
relations  between  the  annual  value  of  the  land  and  the  annual 
social  expenditure.  If  the  land  values  are  greater  than  the 
expenses  of  social  organization,  these  apparently  represent  a  fimd 
from  which  social  revenue  could  be  derived  without  many  of  the 
difficulties  presented  by  other  methods.  If  these  unimproved  values 
are  found  to  be  less  than  social  requirements,  the  extent  to  which 
they  should  be  used  remains  for  discussion.  The  importance,  there- 
fore, of  establishing  the  relation  between  land  values  and  the  expense 
of  social  organization  is  evident. 

The  mere  existence  of  a  population  upon  any  fixed  area  forms  the 
natural  source  from  which  all  values  of  unimproved  land  are  derived; 
and  this  in  the  most  primitive  or  complex  forms  of  society.  With 
increase  of  population  and  social  improvements,  the  natural  value  of 
the  land  augments.  As  societies  are  formed  and  organized  with  greater 
industrial  advantage  and  security,  the  land,  under  their  influences, 
becomes  proportionately  more  valuable;  that  is,  the  mere  surface  of 
the  earth  in  certain  positions  becomes  worth  far  more  than  fertile  or 
mineral  land  in  other  situations.  This  added  value  is  given  by  organized 
society  and  the  advantages  it  offers;  greater  in  one  place  than  in  another. 
The  value  men  are  willing  to  pay  for  the  use  of  unimproved  land  in  one 
spot  is  the  value  they  are  willing  to  pay  for  the  advantages  offered  by 
society  in  that  place.  These  generally  take  the  form  of  security  of 
property,  markets,  profits,  business  opportunities,  transportation  facili- 
ties, and  other  advantages,  social  and  administrative.    Thus  the  value 

i8i 


i82  The  Value  of  the  Land  Pt.  Ill 

of  unimproved  land,  or  ground-rent,  is  the  price  men  are  willing  to 
pay  for  the  privileges  and  gains  derived  from  living  in  organized  society. 
Ground-rent  expresses  in  money  what  organized  society  is  worth  to 
the  individual. 

On  the  other  hand,  however,  organized  society  implies  expense,  or 
cost  of  organization,  and  this  cost  is  measured  by  taxes.  Ground-rents 
represent  what  society  is  worth  to  the  individual  in  profits,  and  social 
opportunity;  taxes  represent  what  the  same  society  costs  the  same 
individual.  As  these  values  are  usually  expressed  in  the  same  money, 
at  the  same  place,  and  at  the  same  time,  they  may  be  compared.  If 
the  value  of  the  advantages  which  society  offers  in  the  form  of  industrial 
opportunity,  profits,  wages,  and  so  forth,  measured  in  money,  were 
not  greater  than  the  expenses  involved  in  the  form  of  taxes,  measured 
in  the  same  money,  men  would  cease  to  live  in  society  and  scatter  them- 
selves irregularly  over  the  surface  of  the  earth.  In  other  words,  if 
the  value  of  social  advantages,  expressed  in  ground-rents,  did  not  exceed 
the  value  of  social  expense,  expressed  in  taxes,  there  would  be  no  eco- 
nomic justification  for  the  existence  of  organized  society.  But  as  society, 
in  its  organized  form  does  exist,  there  is  reason  to  believe  it  worth 
more  than  it  costs;  or,  to  express  the  same  relation  in  different  terms, 
that  ground-rents  are  greater  than  taxes. 

The  cost  of  organizing  society  could  apparently  not  be  greater  than 
the  economic  advantages  derived,  as  these  advantages  are  necessarily 
the  basis  upon  which  ground-rents  depend.  Where  this  is  not  the  case, 
that  is,  where  taxes  are  greater  than  ground-rents,  it  would  seem  that 
the  eventual  disorganization  of  the  society  must  follow,  for  its  sup- 
port would  cost  more  than  the  advantages  offered  were  worth.  Taxes 
would  be  greater  than  the  economic  advantages  obtainable. 

As  society  grows  in  wealth,  however,  so  will  its  administrative  needs, 
although  it  would  seem  that  the  latter  can  never  overtake  the  former, 
as  the  cost  of  administration  must  follow  and  be  dependent  upon  the 
wealth  administered.  Even  in  a  declining  society  this  relation  would 
prevail;  for,  where  the  value  of  land  and  social  wealth  is  decreasing, 
so  must  the  social  needs,  until,  with  the  divorce  of  value  from  the  land, 
the  social  wealth  will  disappear  and  with  it  the  need  of  administra- 
tion. It  thus  seems  that,  in  any  and  all  forms  of  society,  the  annual 
value  of  land  is  greater  than  the  annual  social  expenditure. 

The  development  of  the  same  train  of  thought  might  establish  a 
closer  relation  between  the  two.     The  foregoing  considerations  are 


Bk.  I  Land  Values  183 

based  upon  any  and  all  methods  of  raising  revenue;  therefore,  upon  those 
at  present  in  use.  But  many  of  these  methods  cost  the  people  much 
more  than  the  revenue  obtained.  Ground-rents,  therefore,  are  not  only 
greater  than  the  revenue  derived,  but  greater  by  the  cost  of  the  revenue 
over  the  amount  realized.  Nor  is  this  the  only  addition  which  may  be 
made  to  the  first  estimate,  for,  through  increased  prices,  due  to  artificial 
and  protective  taxation,  and  consequently  increased  living  expenses 
of  all  kinds,  it  will  be  evident  that  the  actual  revenue  not  only  costs 
the  people  more  than  the  amount  derived,  but  that  this  amount  is 
decreased  in  its  efficiency,  or  purchasing  power.  Ground-rents,  there- 
fore, may  be  regarded  as  not  only  greater  than  social  revenue  by  the 
cost  of  the  revenue  over  the  amount  obtained,  but  also  by  the  decreased 
efficiency  of  the  actual  revenue  created.  Still  one  more  consideration 
may  be  suggested.  All  revenue  must  ultimately  be  derived  from  the 
productive  industries  of  a  society,  as  these  industries  create  the  total 
or  gross  revenue  of  the  people.  As  these  industries,  again,  are  the 
chief  employers  of  land  and  labour,  it  seems  to  follow  that  the  total 
return  from  the  land  is  diminished  through  the  action  of  indirect  taxa- 
tion, owing  to  the  necessary  restriction  of  the  natural  industrial  de- 
velopment, and  the  stiffing  of  normal  consuming  powers.  In  other 
words,  if  all  restrictions  were  removed  from  industry  and  consumption, 
the  productive  use  of  land  would  be  materially  increased,  and  its  total 
annual  value  correspondingly  greater.  Natural  land  values  thus  seem 
to  be  considerably  greater  than  the  expenses  of  social  administration. 

Section  II  —  Method  of  Estimation 

In  order  to  present  specific  relative  estimates  of  the  value  of  unim- 
proved land  and  social  expenditure,  it  is  necessary  to  select  a  few  coun- 
tries, states,  and  cities;  to  calctdate  as  nearly  as  possible  the  annual 
value  of  the  land  in  these  places,  and  compare  this  value  with  the  total 
amount  of  revenue  raised  at  present,  while  bearing  in  mind  the  following 
principles: 

1.  Ground-rent,  or  economic  rent,  is  the  total  value  of  imimproved 
land,  including  taxes  already  paid  by  it. 

2.  The  annual  market  value  of  unimproved  land  is  the  ground-rent, 
or  economic  rent,  less  these  taxes.  The  annual  market  value  of  the 
land  constitutes  the  net  rent. 

3.  The  existing  capitalized,  or  market  value,  of  land  is  equal  to 
the  net  annual  rent  expected  (deducting  taxes)  multiplied  by  the  number 


i84  The  Value  of  the  Land  Pt.  Ill 

of  years,  which,  multiplied  by  the  current  rate  of  interest,  would  produce 
one  hundred. 

4.  The  true,  or  total,  capitalized  value  of  land  is  reached  in  the 
same  way  without  the  deduction  of  taxes. 

5.  The  annual  ground-rental  value  of  land,  therefore,  may  be  con- 
sidered as  equal  to  the  average  rate  of  interest  on  its  capitalized  value, 
plus  all  taxes  levied  on  land  values  at  present. 

One  method  of  establishing  the  relation  of  ground-rents  to  revenue 
would  thus  be  to  calculate  the  present  net  unimproved  rent,  add  all 
taxes  paid  by  this  rent  at  present,  and  estimate  the  proportion  of  this 
gross  or  economic  rent  to  gross  taxes.  There  is,  however,  a  slightly 
simpler  method  leading  to  the  same  result,  which  may  better  serve  the 
present  purpose. 

The  method  is  to  estimate  as  nearly  as  possible: 

1.  The  present  net  rent  (deducting  taxes)  of  the  land  in  the  places 
selected. 

2.  The  entire  amount  of  revenue  produced. 

3.  The  amount  of  revenue  at  present  raised  from  ground-rents. 

4.  The  amount  of  taxes  which  it  would  be  necessary  to  assess  upon 
present  net  ground-rents,  in  addition  to  existing  taxes,  should  all  revenue 
be  derived  from  the  single  source  of  unimproved  land  values. 

In  order  to  estimate  approximately  the  present  net  rent  of  unim- 
proved land  within  any  administrative  area,  it  is  essential  to  establish 
a  relation  between  land  values  in  general,  and  some  definite  value  rec- 
ognized in  the  present  system  of  valuation,  which  may  Uhus  serve 
as  a  basis  of  calculation,  or  mean  proportional.  Total  real  estate 
forms  the  most  satisfactory  value  of  this  kind;  it  becomes  necessary, 
therefore,  to  attempt  to  establish  a  generally  acceptable  propor- 
tion between  unimproved  land  values,  or  ground-rents,  and  total  real 
estate. 

M.  de  Foville  estimates  the  capitalized  value  of  the  land  of  France 
in  private  fortunes  at  three  billion  pounds  sterling;  buildings  at  two 
billions.^  This  would  give  an  estimate  of  five  billions  for  total  real 
estate;  the  land  alone  would  thus  be  worth  three  fifths  or  60  per  cent 
of  real  estate.  It  is  probable,  however,  that  these  figures  include  all 
absorbed  improvements  of  agricultural  property  as  "land,"  but  also 
that  they  disregard  value  attaching  to  the  land  through  the  annual 
earning  powers  of  franchises  public,  corporate,  and  individual;  if  such 

*  Statesman's  Year  Book,  igii,  p.  765- 


Bk.  I  Land  Values  185 

is  the  case,  the  60  per  cent  here  represented  as  "land"  is  probably  below 
the  truth.  It  remains  to  be  discovered  to  what  extent  this  approximate 
estimate  of  60  per  cent  may  be  regarded  as  applicable  to  other  countries, 
and  all  kinds  of  real  estate,  to  agricultural  land,  suburban  property, 
and  to  sites  and  buildings  of  metropolitan  centres. 

With  reference  to  agricultural  values  perhaps  the  most  comprehen- 
sive returns  in  the  most  convenient  form  are  found  in  the  following 
table: 

AGRICULTURAL  CAPITAL* 
Value,  Millions  £  Sterling 

Land  Cattle  Sundries  Total 

United  Kingdom       .       .       .       i,686  202  189  2,077 

France 2,580  232  281  3,093 

Germany i,977  303  228  2,508 

Russia 2,113  350  247  2,710 

Austria 1,473  161  163  i,797 

Italy 1,180  92  127  1,399 

Spain 1,056  46  no  1,212 

Portugal 138  II  IS  164 

Sweden  and  Norway        .       .           212  41  25  278 

Denmark 205  26  23  254 

Holland 240  28  27  295 

Belgium 300  22  32  354 

Switzeriand        ....           138  18  16  172 

Danube  States   ....          420  42  46  508 

Greece 94  5  10  109 

Europe 13,812  1,579  i,539  16,930 

United  States     ....  3,314  451  377  4,142 

Canada 230  47  28  305 

Australia 236  120  36  392 

Total 17,592       2,197       1,980       21,769 

These  relations  indicate  that  more  than  60  per  cent  of  total  agri- 
cultural capital  is  represented  by  the  value  of  land.  The  values  here 
returned  as  land,  however,  are  doubtless  improved  values  and  there- 
fore greater  than  ground  values.  On  the  other  hand,  many  of 
the  values  returned  under  the  headmgs  "Cattle"  and  "Sundries" 
are,  no  doubt,  not  real  estate  in  the  proper  sense  of  the  word, 
which  would  form  a  perhaps  compensating  consideration  on  the 
other  side.  An  analysis  of  these  figures,  however,  does  not  indicate 
that  the  value  of  imimproved  agricultural  land  is  less  than  60  per  cent 
of  total  agricultural  real  estate,  which  is -all  that  is  necessary  for  the 
present  purpose. 

In  turning  the  attention  to  occupied  land,  a  more  complicated  series 

*  Industries  and  Wealth  of  Nations.     Mulhall,  p.  384. 


i86  The  Value  of  the  Land  Pt.  Ill 

of  values  is  met;  it  being  evident  that  the  relation  between  land  and 
real  estate  will  vary  almost  indefinitely  in  the  same  city,  the  same 
neighbourhood,  or  the  same  street.  Instead  of  reference  to  particular 
returns,  a  safer  method  of  discovering  the  average  relations  between 
land  and  real  estate  in  cities  would  be  to  observe  the  average  which 
experience  has  shown  to  be  the  most  advantageous  from  the  point  of 
view  of  investment.  Such  an  average  would  cover  occupied  land  from 
the  least  to  the  most  valuable,  and  present  a  relation  which 
values  will  not  only  approximate,  but  to  which  they  must  ulti- 
mately conform,  whatever  the  original  relations;  for  widely  differ- 
ing relations  will  be  proportionately  unprofitable,  and  subsequent 
variations  approach  the  most  profitable  average,  through  a  process  of 
elimination. 

A  thorough  study  of  the  subject  in  this  connexion  is  presented  by 
Mr.  Richard  M.  Hurd,  who  shows  the  results  of  the  examination  of 
"the  mass  of  valuations  of  land  and  buildings,  rentals,  and  mortgages 
obtained  in  about  fifty  cities,"  the  point  of  view  being  that  of  a  "con- 
servative lender  on  real  estate."  He  saysi^  "The  most  important 
consideration  governing  suitability  to  location  is  that  of  proportion  of 
cost  of  building  to  value  of  land,  the  safe  general  rule  being  that  the 
cost  of  the  building  should  approximately  equal  the  value  of  the  land. 
In  other  words,  the  typical  successful  property,  land  and  building,  ap- 
pears to  earn  double  interest  on  the  cost  of  the  building,  one  half 
of  which  capitalized  as  economic  rent  gives  a  value  to  the  land 
equal  to  the  cost  of  the  building.  While  there  are  exceptions  to  this 
proportion  it  forms  a  median  line  of  departure,  applying  most  closely 
to  business  property,  whether  the  building  is  a  $5,000  one-story 
brick  on  a  cheap  lot  or  a  $3,000,000  ofiice  building  in  the  highest  price 
location." 

This  statement  of  the  general  proportion  of  land  to  building  values, 
with  reference  to  the  most  profitable  returns,  is  of  greater  interest  in 
the  present  inquiry  than  any  amount  of  particular  statistical  infor- 
mation; certain  considerations  are,  however,  suggested. 

If  land  and  building  represent  approximately  equal  investment,  or 
original  cost,  there  must  be  a  change  in  their  relation  in  the  course  of 
time;  and  this  change  will  apparently  always  be  in  favour  of  the  land, 
as  bricks  and  mortar  rarely,  if  ever,  appreciate  while  land  often  does. 
Where  land  falls  in  value  the  building  must  of  necessity  follow  suit. 

'  Principles  of  City  Land  Values,  p.  97- 


Bk.  I  Land  Values  187 

As  Mr.  Hurd  saysi^  "To  say,  however,  that  buildings  create  land  values 
is  to  reverse  the  truth,  buildings  being  the  servants  of  the  land  and  of 
value  only  as  they  fulfil  its  needs."  Thus  a  building,  situated  upon  land 
rising  rapidly  in  value,  may  depreciate  in  proportion  to  the  rise  of 
the  value  of  the  land,  until  the  building  is  torn  down.  In  such  a  case, 
the  land  was  not  only  worth  100  per  cent  of  total  real  estate,  but  more 
valuable  with  no  building,  by  the  cost  of  demolition.  Where  land  is 
rapidly  declining  the  same  phenomena  might  occur.  Thus,  all  changes 
redound  to  the  relative  advantage  of  land.  "One  fruitful  source  of 
error,"  says  Mr.  Hurd,^  "in  studying  land  values  is  to  regard  the  prob- 
lem as  involving  only  a  point  of  time  instead  of  a  period  of  time.  Any 
valuation  based  upon  present  facts  alone  is  incomplete,  consideration  of 
past  influences  and  future  prospects  being  vitally  necessary.  The 
life  of  value  in  land,  whether  the  unit  taken  is  a  city,  a  section  of  a  city, 
or  a  single  lot,  bears  a  close  analogy  to  all  other  life  in  being  normally 
characterized  by  a  small  beginning,  gradual  growth,  and  increased 
strength  up  to  a  point  of  maximum  power,  after  the  attainment 
of  which  comes  a  longer  or  shorter  decline  to  a  final  disappear- 
ance. Thus  all  value  in  city  land  undergoes  a  continuous  evolution 
from  a  state  of  non-existence  through  a  cycle  of  changes,  to  a  final 
dissolution,  or  to  a  new  birth,  when  the  process  is  repeated  on  the  same 
land." 

The  cycle  of  changes  will  in  nearly  all  instances  result  in  the  appre- 
ciation of  land  values  in  relation  to  improvements,  whether  the  land 
itself  is  stable,  rising,  or  declining  in  value.  Thus,  with  any  city  as  a 
unit,  in  which  land  and  improvements  represented  equal  original  in- 
vestment, if  these  values  are  compared  at  any  given  time,  the  value 
of  the  land  may  be  considerably  greater  than  the  value  of  improvements; 
only  the  more  recent  values  conforming  to  the  typical  50  per  cent 
proportion. 

Again,  it  may  be  remembered,  in  computing  the  values  of  the  land  area 
of  any  city,  that  the  value  of  its  franchises  is  an  essential  element  in 
their  estimation.  The  land  pri\dlege  of  a  transportation  company 
is  as  much  an  element  of  value  as  the  right  to  erect  a  building.  Thus, 
if  the  capitalized  value  of  all  franchises,  granted  by  any  city,  is  added 
to  the  present  estimated  value  of  its  land  area,  and  these  values  com- 
pared to  total  real  estate,  the  value  of  the  land  will,  apparently,  be 

1  Ibid.,  p.  17- 
»  Ibid.,  p.  18, 


i88  The  Value  of  the  Land  Pt.  Ill 

greater  than  60  per  cent  of  total  real  estate.  ^  This  proportion  will 
therefore,  be  adopted  in  the  following  estimates  as  well  within  conser- 
vative limits.  If  the  60  per  cent  average,  however,  for  any  reason  is 
regarded  as  too  high,  calculations  may  be  made  upon  any  more  satis- 


•  A  few  specific  instances  and  figures  may  be  presented.  An  interesting  study  of  the  value  of  unimproved 
land  will  be  found  in  Mr.  T.  G.  Shearman's  work,  Natural  Taxation.  Mr.  Shearman  there  presents 
careful  analysis  of  a  great  number  of  returns  in  reference  to  agricultural  and  urban  values;  on  page  138,  Mr. 
Atkinson  is  cited  as  follows  with  reference  to  values  in  Boston:  "  At  the  average  of  recent  years  the  value 
of  land  is  $333,000,000;  of  buildings  and  improvements,  $230,000,000."  Total  real  estate,  $563,000,000. 
Land  values  over  59  per  cent  of  real  estate  irrespective  of  franchise  values  and  without  estimating  the  taxes 
already  paid  by  the  land  both  of  which  would  increase  the  percentage.  Mr.  Thomas  Hills,  who  was  chair- 
man of  the  Boston  board  of  tax  assessors  for  twenty-five  years  is  cited  on  page  237  as  giving  "the  precise 
figures  for  1892,  of  a  single  block  in  the  heart  of  Boston,  lying  between  Washington  Street  and  Tremont 
Street.  This  block,  containing  97,652  square  feet,  was  assessed,  for  the  land  alone,  $7,157,800,  and  for 
buildings  alone  $982,200.  The  pure  land  value  was  $73.29  per  foot  $3,192,512  per  acre;  the  building 
value,  $10.05  per  foot;  $437,778  per  acre.  Thus,  in  one  of  the  most  thickly  settled  and  closely  built  parts 
of  Boston,  the  land  value  is  more  than  seven  times  as  great  as  the  building  value,  and  is  86  per  cent  of  the 
whole  real  estate."  Such  examples  may  be  multiplied  indefinitely.  For  example  (MulhaU  Dictionary  ol 
Statistics  page  313).  "In  1888  there  were  let  on  lease  for  eighty  years  at  Piccadilly  and  Charing  Cross 
Road,  covering  19,000  square  feet  for  £3,600  per  annum,  being  at  the  rate  of  £8,300  per  acre;  the  tenant 
erecting  buildings  worth  £27,000.  This  would  represent  a  selling  value  of  £300,000  per  acre  for  the  land." 
Estimating  the  expected  return  on  the  capital  invested  in  the  buildings  at  3  per  cent,  the  annual  building 
rental  would  be  £810.  The  total  rental  value  of  the  property  thus  representing  £4,410  of  which  £3,600 
is  pure  land  value;  over  75  per  cent  of  the  total  without  reference  to  the  return  expected  upon  the  ground 
rental  invested. 

"  In  four  years  ending  1886,  Hamburg  put  up  new  suburbs  and  houses  worth  £3,305,000,  the  value  of  the 
sites  being  60  and  the  building  40  per  cent  of  the  total  (Diet.  Statistics  page  316)."  This  estimate,  of 
course,  disregards  taxes  already  paid  by  the  land  together  with  all  franchise  values. 

A  brief  historical  review  of  the  subject  may  not  be  without  interest.  "In  1660  Petty's  valuation  places 
land  values  at  S7  per  cent,  of  total  wealth;  the  selling  prices  being  then  imder  £5  an  acre.  At  the  time  of 
Davenant  (1703)  land  had  risen  to  £9;  "at  the  time  of  Young  (1774)  to  £18.  The  total  wealth  respectively 
estimated  at  (millions)  £250,  £490,  and  £1,100.  Toward  the  close  of  the  eighteenth  century,  Beeke,  Pitt, 
and  Eden  made  valuations  for  Great  Britain.  The  valuation  of  real  estate  is  given  by  Doctor  Beeke  as 
920  millions  —  viz.: 

Land  in  England £600,000,000 

Land  in  Scotland 120,000,000 

Houses  in  Great  Britain 200,000,000 

Real  Estate £920,000,000 

Land 720,000,000 

"  The  most  elaborate  work  of  this  kind  was  Colquhoun's,  in  1812,  which  formed  the  basis  on  which  Lord 
Liverpool  and  Pavlo  Pebrer  evidently  constructed  their  subsequent  tables.  Pebrer's  estimates  give  the 
following  valuations  for  the  United  Kingdom: 

Land 1,600  (Mil.  Sterling) 

Houses 533 

Mines  and  Canals      .......        166 

Real  Estate 2,299 

Land 1,060 

"  Porter's  estimate  in  1840  confirmed  those  previously  made  and  showed  a  progressive  increase  in 
wealth." 

Spallart  gives  the  following  returns  for  Italy: 

Land 1,160  (Mil.  Sterling) 

Houses 360 


Bk.  I  Land  Values  189 

factory  basis;  no  essential  difference  is  obtained  until  the  average  is 
reduced  to  25  or  30  per  cent,  for  which  no  justification  is  found. 

A  more  or  less  acceptable  ratio  between  pure  land  values  and  total 
real  estate  is  thus  established,  and  it  remains  to  discover  what  relation 
these  land  values  bear  to  social  expenditure.  Real  estate  is  already 
estimated  in  this  connexion  as  one  of  the  present  sources  of  revenue, 
and  will  form  one  of  the  terms  of  a  proportion,  or  common  denominator, 
by  means  of  which  this  relation  may  be  approximated. 

In  any  attempt  at  even  relatively  exact  study  of  the  subject,  it  is 
evident  that  the  distinction  between  the  present  annual  return  of  unim- 
proved land  and  its  economic,  or  true  value,  cannot  be  too  strongly 
emphasized.  Ground-rents,  or  total  land  values,  are  already  taxed  to  a 
certain  extent  by  present  methods,  these  taxes  have  long  been  capital- 
ized and  the  market  value  of  the  land  proportionately  reduced.  In 
order,  therefore,  to  reach  the  true  value  of  ground-rents,  the  amount 
of  taxes  already  paid  should  be  added  to  present  net  rents.  For  example : 
If  the  untaxed,  or  gross,  rent  of  a  tract  of  land  is  £  1,000,  at  twenty  years 
purchase  its  value  will  be  £  20,000.  If,  however,  this  land  is  subject 
to  a  tax  of  £  200,  or  20  per  cent,  its  capitalized  value  will  be  proportion- 
Mr.  Coglan  gives  these  estimates  for  Australia: 

Land S33  (Mil.  Sterling) 

Railways 94 

Houses 239 

Total  Real  Estate 866 

Canada  land 288  (Mil.  Sterling) 

Rails 151 

Houses 127 

Total  Real  Estate S66 

Cf.  Mulhall's  Did.  of  Statistics,  pp.  389,  S97. 

The  total  ratable' valuation  for  Ireland  in  1867  is  given  as  £12,975,000,  of  which  £9, 100,000' was  land. 

The  valuation  for  1901  is  given  as  follows: 

Land £9,066,000 

Houses 5,163,000 

Rails 704,000 

Total £14,933,000 

—  Surveyors'  Institute  Transactions,  Vol.  XXXV,  p.  288. 

f  The  land  returned  throughout  these  estimates  no  doubt  includes  absorbed  improvements  such  as  ditch- 
ing, drainage,  tillage,  and  so  on,  which  will  swell  its  value;  on  the  other  hand,  the  total  is  always  far  in 
excess  of  60  per  cent  of  real  estate  and  compensating  elements  of  value  have  been  neglected  in  taxes 
already  assessed  and  franchises.  These  figures  seem  to  show  that  the  estimate  of  60  per  cent  of  total  real 
estate  values,  as  pure  unimproved  land  value,  is  conservative.  The  subject  is  thoroughly  discussed  by 
Mr.  Shearman.  He  presents  a  great  number  of  estimates  based  upon  reports  of  urban  and  agricultural 
values  in  the  United  States.  His  conclusions  are  identical  with  those  of  the  text  although  based  upon 
totally  different  methods  of  calculation.  His  conclusion  is  that  unimproved  land  forms  more  than  60  per 
cent  of  urban  real  estate  values  and  possibly  less  of  agricultural  real  estate,  while  60  per  cent  is  a  conserv- 
ative estimate  of  average  conditions  and  in  all  likelihood  below  the  truth. 


190  The  Value  of  the  Land  Pt.  Ill 

lately  diminished,  or  equal  to  but  £16,000;  the  difference,  £4,000,  being 
the  capitalized  value  of  the  taxes  imposed.  If,  therefore,  in  order  to 
raise  the  total  revenue  from  groimd-rents  alone,  it  were  necessary  to 
impose  an  assessment  upon  the  land  of  £500  a  year,  it  is  evident  that 
the  present  assessment  need  be  increased  but  by  £300  as  the  land 
already  pays  £200  of  the  £500  required. 

Nearly  all  criticism  of  the  taxation  of  land  values  regards  present 
land  values  as  untaxed;  it  appears  that  to  assess  all  contributions  upon 
ground-rents,  would  require  the  assessment  of  all  present  taxes  upon 
present  ground-rents.  This  is  a  mistake  to  the  extent  in  which  taxes 
are  already  borne  by  land  values,  as  the  market  value  of  the  land,  and 
the  rent  derived,  are  naturally  reduced  by  the  capitalized  and  annual 
value  of  the  taxes  paid.  As  the  capitalized  value  of  the  land  is  but  the 
capitalized  value  of  the  net  rent,  it  follows  that  this  capitalized  value 
must  be  proportionately  smaller  as  the  net,  or  taxed,  rent  is  smaller 
than  the  gross,  or  untaxed,  rent. 

Sixty  per  cent  of  all  real-estate  values  seems,  on  the  average,  repre- 
sented by  the  unimproved  value  of  the  land.  If  60  per  cent  of  total 
real  estate  is  pure  land  value,  60  per  cent  of  taxes  paid  at  present  by 
real  estate,  fall  upon  ground-rents  —  that  is,  are  already  paid  by  the  land 
and  must,  in  consequence,  be  deducted  from  total  taxes  in  order  to 
discover  what  additional  contribution  should  be  derived  from  land  in 
order  to  raise  the  total  revenue  from  this  source. 

Here  a  moment's  attention  may  be  given  to  a  subject  of  importance: 
that  form  of  socially  created  wealth  coming  under  the  general  term 
"franchise."  A  franchise  is  the  permission  granted  by  a  society 
to  individuals  or  corporations  to  make  use  for  a  given  purpose  of  cer- 
tain lands  under  the  jurisdiction  of  the  society.  The  use  of  these 
lands  is  the  only  real  value  attaching  to  the  franchise.  Railways  are 
naturally  the  most  important  of  the  land-using  corporations  to-day, 
and  their  land-using  privileges,  or  franchises,  are  the  sources  from  which 
they  derive  their  wealth-producing  power.  The  exclusive  right  to  the 
use  of  a  narrow  strip  of  land,  ten  or  ten  thousand  miles  long,  gives 
railways  their  value ;  and  this  value  derived  from  the  land  is  as  much  its 
inherent  attribute  as  the  situation  of  urban  property,  mineral  wealth, 
or  the  natural  fertility  of  the  soil.  The  fact  that  the  land  used  by  a 
railway  is  but  a  strip  of  barren  wilderness  no  more  detracts  from  its 
value  as  a  medium  of  transportation,  than  the  fact  that  a  city  lot  may 
be  useless  for  pasture  detracts  from  its  value  as  a  building  site.      The 


Bk.  I  Land  Values  191 

value  of  land  used  by  a  railway  is  as  real  and  measurable  as  any  form 
of  value  adhering  to  land  for  any  purpose.  The  value  of  land  depends 
upon  one  thing:  the  use  to  which  it  may  be  put,  and  to  estimate  the 
value  of  the  land  used  by  a  railway  upon  any  basis,  other  than  the 
value  of  the  franchise,  is  on  a  par  with  the  estimation  of  land  in  urban 
centres  with  reference  to  fertility. 

The  total  value  of  the  securities  of  a  railway  corporation,  less  the 
total  value  of  its  stationary  property,  rolling  stock,  road  bed,  equipment, 
and  so  forth,  represents  the  value  of  its  franchises;  and  the  value  of 
these,  plus  the  taxes  paid  by  the  railway  on  land,  represents  the  true 
or  economic  value  of  the  land  it  uses.  The  relation  between  these 
franchises,  or  land  values,  is  shown  in  the  history  of  almost  any  railway, 
in  the  difference  between  the  value  of  its  securities  and  the  cost  of  equip- 
ment. 

These  considerations  apply  to  all  forms  of  franchises.  Telegraph, 
telephone,  and  gas  companies,  electric  light  plants,  water  works,  and 
street  railways  owe  their  wealth-producing  abilities  to  their  right  to  the 
use  of  land  in  certain  neighbourhoods.  Without  this  privilege  their 
wires,  pipes,  rails  and  rolling  stock  would  be  useless.  The  importance 
of  this  privilege  may  be  judged  by  comparing  the  value  of  securities 
issued  against  it  with  the  other  values  involved.  If  these  comparisons 
are  made,  the  value  of  the  franchise,  or  the  value  of  the  right  to  the 
use  of  the  land,  will,  in  all  probability,  often  be  found  to  form  by  far 
the  greater  portion  of  the  total  value;  much  nearer  100  per  cent,  perhaps, 
than  the  60  per  cent  adopted.  The  value  of  a  franchise  might  in  some 
cases  be  many  times  other  values  involved.  In  the  case  of  franchise 
pri\'ileges,  however,  the  same  average  may  be  maintained,  although 
doubtless  much  below  the  truth.  The  value  of  both  franchise  privileges 
and  ordinary  ground-rents  is  created  by  society  as  a  whole.  All 
land-using  interests,  indi\adual  or  corporate,  are  here,  therefore,  re- 
garded as  "Real  Estate"  and  60  per  cent  of  their  value  as  ground-rents. 

A  position  has  now  been  developed  from  which  some  of  the  returns  of 
particular  societies  may  be  examined  with  reference  to  the  relative 
values  of  ground-rents  and  revenue  in  order:  (i)  to  attempt  to  es- 
tablish a  relation  between  the  two;  (2)  to  estimate  the  amount  of 
additional  contribution  necessary  from  ground-rents  in  order  to  pro- 
duce the  entire  revenue  from  this  one  source. 

An  able  analysis  of  this  nature  is  in  existence;  the  work  of  Mr.  T.  G. 
Shearman,  and,  as  his  figures  have  stood  the  test  of  time,  they  possess 


192 


The  Value  of  the  Land  Pt.  Ill 


greater  value  than  would  more  recent  compilations.  With  one  or 
two  exceptions,  therefore,  the  following  estimates  are  a  review  of  Mr. 
Shearman's  study  of  the  subject.   The  United  Kingdom  is  considered  first. 

Section  III  —  Estimates 
Article  1 — Great  Britain  1885. 

The  returns  for  1885  are  used  in  the  following  estimates.  The  whole 
amount  raised  by  taxation,  says  Mr.  Shearman,  ^  national  and  local,  in 
Great  Britain  and  Ireland  for  1885,  was  £118,341,000.  (Statesman's 
Year  Book,  1888,  p.  236): 

The  official  returns  of  the  income-tax  for  1885  (twenty-eighth  Report 
Internal  Revenue  Department)  show  the  following  results.  All  incomes 
will  be  classed  as  ''British." 

British  Net  Incomes  from  Real  Estate  —  Returned  in  1885. 

I.  From  pure  ground-rents: 

Manors,  tithes,  fines,  etc £853,000 

Fishing  and  shooting  rights  ....  572,000 

Market  privileges  and  tolls 607,000       £2,032,000 

II.  From  land  and  improvements: 

Agricultural  lands £65,442,000 

Houses  and  lots      .......  127,050,000 

Canals,  water  works,  mines,  iron  works,  gas 

works,  etc 22,381,000 

Railways 33,050,000 

£247,923,000 

60  per  cent  of  this  is £148,753,000 

Net  annual  ground-rents £150,785,000 

Taxes  may  now  be  considered  which  have  been  levied  already  upon 
land  values  and  which  have  of  course  been  deducted  from  gross  rent 
in  the  above  returns.     They  are  as  follows : 

Land-tax £1,045,000 

Inhabited  house  duty 1,855,000 

Income-tax  on  rents 3,605,000 

Local  rates 37,846,000 

Tithes 4,054,000       £48,405,000 

•  Natural  Taxation.    Thomas  G.  Shearman,  p.  143. 


Bk.  I  Land  Values  193 

Sixty  per  cent  of  this  amount,  or  £29,043,000,  must  be  deducted  from 
total  taxes,  as  that  much  is  already  contributed  by  the  land;  £150,785,000 
being  the  net  return  in  ground-rents. 

Gross  British  taxes £ii8,34i,cx30 

Deduct  taxes  now  paid  from  ground-rents        .         29,043,000 

£89,298,000 

This  is  the  amount,  says  Mr.  Shearman,  which  would  be  collected 
from  British  rents  if  all  taxes  were  levied  upon  them.  It  is  almost 
exactly  59  per  cent  of  British  net  ground-rents,  leaving  all  rent  from 
houses  and  improvements  untaxed.  All  British  and  Irish  taxes  could 
be  paid  out  of  existing  rents  and  yet  leave  to  the  landlords  a  clear  income 
of  £61,487,000  ($300,000,000)  per  annum,  besides  their  house  rents,  etc., 
amounting  to  at  least  as  much  more. 

Article  2  —  The  United  States  18 go. 

The  census  of  1890,  continues  Mr.  Shearman,  estimates  the  total 
real  "wealth"  of  the  United  States  at  $65,037,091,197;  of  which  real 
estate  is  set  down  at  $39,544,544,333.  But  of  this,  real  estate  to  the 
real  value  of  $3,833,335,225  is  exempt  from  taxation;  and  as  there  is 
no  use  in  taxing  public  property,  only  to  pay  the  tax  out  of  the  public 
treasury,  exempt  property  may  as  well  be  excluded  from  these  calcu- 
lations. 

The  assessed  valuation  of  property  in  1890,  which  of  course  has  little 
relation  to  its  real  value,  was: 

Real  estate $18,956,556,675 

Personal  property    ....  6,516,616,743 

$25,473,173,418 

Thus  it  will  be  seen  that  real  estate  constituted  74^  per  cent  of  all 
assessed  property,  and  therefore  bore  that  share  of  ad  valorem  taxes. 
For  convenience,  this  share  may  as  well  be  called  75  per  cent.  The 
local  ad  valorem  taxes  amounted  to  $470,652,000.  Reckoning  land  values 
as  usual  at  60  per  cent  of  real  estate,  those  values  bore  60  per  cent 
of  75  per  cent  of  all  local  ad  valorem  taxes.  This  is  exactly  45  per 
cent,  leaving  55  per  cent  to  be  borne  by  land  improvements  and  per- 
sonal property.  Special  taxes,  such  as  licenses,  succession  taxes, 
corporation  taxes,  poll  taxes,  etc.,  are  not  included.  But,  as  a  large  pro- 
portion of  what  is  assessed  as  personal  property  is  in  fact  real  estate 


194 


The  Value  of  the  Land  Pt.  Ill 


in  a  disguised  form,  the  probability  is  that  real  estate  actually  bears 
more  than  75  per  cent  of  all  local  taxes  of  every  description. 

The  valuation  of  real  estate  in  the  census  was  certainly  not  made 
upon  any  lower  estimate  of  the  rate  of  interest  than  5  per  cent,  as 
even  that  would  value  land  at  twenty  years'  purchase.  Only  a 
small  part  of  American  real  estate  could  be  sold  then  or  now  at 
even  that  rate.  Nevertheless,  that  rate  is  here  accepted.  It  fol- 
lows that  rent  must  be  reckoned  at  5  per  cent  on  the  capitalized 
value  of  land,  since  "land"  in  law  is  nothing  but  a  name  for  a  title  to 
ground-rents. 

On  this  basis  the  following  results  are  reached.  They  are  extremely 
conservative;  that  is  to  say,  they  err  on  the  side  opposed  to  the  argument 
here  presented. 

Trtie  Value  of  Real  Estate  18 go 

Real  estate  taxed  as  such' $35,711,209,000 

Railways 8,685,407,000 

Mines  and  Quarries 1,291,291,000 

Telegraphs  and  Canals,  far  more  than     ....  312,093,000 

Total  $46,000,000,000 

Land  values,  60  per  cent  of  "this  ....     $27,600,000,000 

Ground  Rental  and  Taxes  in  the  United  States. 

Rent  at  5  per  cent  on  $27,600,000,000         .       .       .  $1,380,000,000 

National  expenses $357,889,000 

Local  taxes 470,652,000 

$828,541,000 
Deduct  45  per  cent  of  local  taxes  already  laid  on 

rent 211,793,000 

Taxation  on  present  net  rents  if  aU  other  taxes  are 

repealed 616,147,000 

Surplus  rent $763,252,000 

Thus  all  national  and  local  taxes,  if  collected  exclusively  from  ground- 
rents,  would  absorb  only  44^  per  cent  of  those  rents,  leaving  to 
the  owners  of  the  bare  land  a  clear  annual  rent  of  $763,252,000,  besides 
the  absolutely  untaxed  income  from  all  buildings  and  improvements  upon 
their  land. 

The  above  estimate  of  ground-rents  is  very  far  below  the  reality. 
It  does  not  include  one  dollar  for  the  enormous  value  of  oil  wells, 
gas  wells,  pipe  lines,  the  street  privileges  of  gas,  electric  light,  steam- 

•  Real  estate  worth  over  $3,800,000,000  is  exempt  from  all  taxa'inn. 


Bk.  I  Land  Values  195 

heating,  or  water  companies  and  other  land  privileges  not  expressly 
enumerated. 

Article  3  —  Pennsylvania. 

Owing  to  a  very  remarkable  example  of  public  spirit,  the  State  of 
Pennsylvania  affords  an  opportunity  for  an  inquiry  of  this  kind,  un- 
equalled in  any  other  State.  A  Revenue  Commission  has  been  formed 
by  associations  of  private  citizens,  representing  all  interests,  which  has 
pursued  a  line  of  thorough  investigation  for  several  years  past.  Al- 
though its  work  is  still  incomplete  and  some  of  its  statistics  are  plainly 
erroneous,  they  have  been  prepared  in  the  best  of  faith  and  with  unusual 
care;  while  their  errors  are  easily  found  and  readily  corrected. 

In  round  numbers  the  Commission  estimates  the  entire  wealth  of 
Pennsylvania  in  1892,  at  a  true  value  of  $9,692,000,000.  Of  this, 
$1,250,000,000  are  reported  as  "moneyed  capital."  This  is  an  obvious 
error,  in  a  computation  of  real  wealth.  Moneyed  capital  cannot  mean 
anything  else  than  debts  and  credits,  .  .  .  Deducting  this  item 
there  remains  real  "wealth"  (reckoning  land  values  as  part  of  wealth)  to 
the  amount  of  $8,500,000,000.  On  the  basis  of  a  full  report  of  fire  insur- 
ance in  the  State,  the  Commission  estimates  that  $5,000,000,000  of  this 
amount  is  of  an  insurable  nature,  that  is,  the  value  of  buildings  and 
chattels.  This  leaves  the  value  of  the  bare  land  (which  is  the  only 
thing  incapable  of  being  destroyed  by  insurable  risks)  at  about 
$3,500,000,000,  or  a  trifle  more  than  41  per  cent  of  the  value  of  all 
wealth.     .     .     . 

The  entire  local  taxation  of  Pennsylvania  in  1892  was  $49,383,906. 
Of  this  there  was  levied  upon  real  estate  in  various  forms,  $36,000,000 
as  follows: 

Taxes  on  "real  estate" $32,645,631 

Taxes  on  railways     .......  2,146,331 

Taxes    on    other    land-owning    corporations    about 

$1,200,000  say 1,208,038 

$36,000,000 

Sixty  per  cent,  of  this  is  $21,600,000;  and  this  was  the  amoimt  borne 
by  the  land  values  of  Pennsylvania  in  1S92. 

The  proportion  of  federal  taxation  which  would  have  fallen  upon 
Pennsylvania,  had  federal  taxes  been  direct,  and  le\-ied  in  proportion  to 
population,  as  required  by  the  Consititution,  was  less  than  $30,000,000. 
But  if  levied  in  proportion  to  land  values  alone,  it  would  be  about 


196  The  Value  of  the  Land  Pt.  Ill 

$36,000,000.  These  figures  furnish  all  materials  necessary  to  determine 
the  effect  upon  Pennsylvania  land-owners  of  a  concentration  of  taxes 
upon  ground-rents. 

Pennsylvania  —  Ground-rents  and  Taxes  of  i8q2. 

Rent  at  s  per  cent  on  $3,500,000,000      ....  $175,000,000 

Federal  taxes 36,000,000 

Local  taxes 49)384,ooo 

$85,384,000 
Deduct  60  per  cent  of  real  estate  taxes  already  paid    .  21,600,000 

Taxation  on  present  net  rents,  if  all  other  taxes  are 

repealed 63,784,000 

Surplus  rent $111,216,000 

Thus  all  national  and  local  taxes,  if  collected  only  from  ground-rents, 
would  absorb  less  than  36  per  cent  of  those  rents  in  Pennsylvania, 
leaving  to  the  land-owners  a  clear  income  of  over  $111,000,000  per 
annum,  besides  the  imtaxed  income  from  their  buildings  and  other 
improvements. 

It  will  be  noticed  that  a  much  smaller  proportion  of  ground-rent  seems 
to  be  required  for  the  payment  of  all  taxes  in  Pennsylvania  than 
in  the  United  States  at  large.  This  apparent  discrepancy  is  due 
to  the  fact  that  the  valuation  of  real  estate,  made  by  the  Pennsyl- 
vania Commission,  was  25  per  cent  higher  than  the  census  valuation 
of  1890. 

If  the  census  estimates  should  be  accepted  with  reference  to  Pennsyl- 
vania, as  in  other  cases,  the  result  would  be  as  follows: 

Pennsylvania  —  Ground-rents  in  i8go  —  Taxes  in   i8g2. 

Land  values,  per  census  1890  $2,810,000,000 

Rent  at  5  per  cent $140,500,000 

Federal  taxes 36,000,000 

Local  taxes 49,384,000 

$85,384,000 
Deduct  taxes  falling  on  ground-rents  in  1892       .       .  21,600,000 

Taxation  on  net  rents  of  1892,  if  all  other  taxes  were 

repealed 63,784,000 

Surplus  rent $76,716,000 

On  the  basis  of  the  census  estimates  of  value,  therefore,  the  concen- 
tration of  all  taxes  upon  ground-rents  would  absorb  about  45^  per  cent 
of  Pennsylvania  net  rents.  This,  it  will  be  seen,  is  nearly  the  same 
proportion  of  rent  which  would  appear,  from  the  census,  to  be  sub- 


Bk.  I  Land  Values  197 

ject  to  absorption  by  such  taxation,  if  applied  to  the  United  States  as  a 
whole. 

Article  4  —  Connecticut. 

It  appears,  by  the  Report  of  the  Special  Commission  on  Taxation, 
in  1887,  that  the  local  taxes  of  Connecticut  then  amounted  to  about 
$6,600,000,  that  the  average  tax  rate  was  i|  per  cent  but  railways  were 
separately  assessed  and  taxed  exactly  i  per  cent.  The  assessed  value 
of  real  estate  was  $251,000,000  of  which  land  values,  at  the  usual  rate 
of  60  per  cent,  would  amount  to  $1 50,000,000.  Railway  property  within 
the  State  was  known  to  be  worth,  at  regular  market  prices,  $62,000,000; 
and  it  was  assessed  at  its  full  value,  the  tax  being  made  low  on  account 
of  the  known  under-valuation  of  all  other  property.  The  land  value  in 
railways,  at  60  per  cent,  amounted  to  $37,000,000. 

The  census  of  1890  gives  the  following  returns  of  the  true  market 
value  of  real  estate  in  Connecticut. 

Connecticut  —  True  Values  of  Real  Estate,  i8go. 

Real  estate,  returned  as  such $543,42i,8qi 

Railways   .       .^ S4,S5o,504 

Mines  and  quarries 3,108,787 

Canals,  telegraphs,  etc.* 14,753,310 

$615,834,492 

Sixty  per  cent  of  this  for  land  values  amounts  to  $369,500,000. 

We  can  now  calculate. 

Connecticut  Ground-rents,  i8go,  and  Taxes,  1887. 

Net  ground-rent  at  5  per  cent  on  $369,500,000    .       .  $18,475,000 

Federal  taxes,  apportioned  on  basis  of  rents         .       .  4,800,000 

Local  taxes 6,600,000 

$11,400,000 
Deduct  taxes  already  laid  on  ordinary  land 

values:  $150,000,000  at  15  per  cent   f  2,812,500    .        v 
Do.  on  railways  at  i  per  cent    .      .  370,000    . 

$3,182,500 
Taxation  on  present  net  rents,  if  all  others  are  re- 
pealed           8,217,500 

Surplus  rents $10,257,500 

The  concentration  of  all  taxes  upon  the  ground-rents  of  Connecticut, 
therefore,  would  not  absorb  more  than  44I  per  cent  of  those  net  rents, 

^  This  item  includes  shipping.  But  as  ^as  woiks  and  other  immensely  valuable  franchises  on  land  are  not 
included,  this  item  is  not  too  large. 


igS  The  Value  of  the  Land  Pt.  Ill 

leaving  to  the  land-owners  a  clear  income  of  over  $10,000,000  per  annum, 
besides  all  their  income  from  buildings  and  improvements. 

A  rticle  5  —  Boston. 

For  the  purpose  of  solving  the  problem  submitted  by  Mr.  Edward 
Atkinson,  concerning  the  city  of  Boston,  let  us  accept  his  figures,  although 
they  are  not  brought  quite  up  to  the  date  of  1890,  and  certainly  under- 
state the  value  of  land. 

His  figures  are  given  for  1888,  and  are  as  follows: 

Land,  assessed  value $333,000,000 

Buildings,  assessed  value 230,000,000 

Personal  property 201,000,000 

^  The  whole  amount  of  State  and  local  taxes  in  Boston,  in  1888,  is 
given  by  Mr.  Atkinson  at  $10,000,000  per  annum;  and  he  estimates 
the  national  taxes  at  "a  sum  as  large  if  not  larger  than  all  the  State, 
^county,  city,  and  town  taxes  combined."  But  in  this  he  is  much 
mistaken.  For  many  years  local  taxation  has  exceeded  national  tax- 
ation; and  as  we  have  already  shown,  the  State  and  local  taxes  assessed 
upon  property  by  its  value,  exclusive  of  licenses,  succession  taxes,  and 
many  others,  exceeded,  in  1890,  the  whole  amount  of  national  expend- 
itures by  about  $113,000,000,  In  1888  a  direct  tax  of  $300,000,000 
would  have  amply  sufficed  to  cover  all  the  expenditures  of  the  federal 
government,  pensions  included. 

Apportioned  according  to  population,  as  the  Constitution  requires, 
Boston's  share  of  such  a  direct  tax  would  have  been  $2,100,000.^ 

Apportioned  according  to  the  value  of  the  land,  either  with  or  without 
improvements,  Boston's  share  of  such  a  direct  tax  would  have  been 
much  less  than  $4,500,000.  The  latter  figure  may  be  accepted,  not 
only  as  affording  stronger  support  to  Mr.  Atkinson's  theory,  but  also 
as  based  upon  just  principles,  in  accordance  with  which  it  may  be  assumed 
that  the  Federal  Constitution  would  be  amended,  whenever  strictly 
direct  taxation  is  adopted. 

It  may  be  assumed  with  entire  certainty,  in  this  case,  as  in  others, 
that  the  assessors'  estimate  of  the  value  of  real  estate  was  based  upon 
the  theory  that  it  was  renting  for  at  least  5  per  cent  per  annum,  net,  on 
its  capital  value;  for  it  is  incredible  that  the  assessors  should  have 
valued  land  at  more  than  twenty  times  its  annual  rent.  The  annual 
rental  value  of  the  bare  land  of  Boston  in  1888  was  therefore  at  least 

'  Population.  1890:    United  States,  62,622,000;  Boston,  446,000. 


Bk.  I  Land  Values  199 

5  per  cent  on  $333,000,000;  that  is  to  say  $16,650,000.     The  tax  rate 
was  $13.50  per  $1,000  or  $4,500,000  on  the  bare  land. 

On  this  basis,  and  giving  the  benefit  of  every  doubt  in  favour  of  Mr. 
Atkinson's  views,  the  following  conclusions  are  reached: 

Boston  Ground-renis  and  Taxes  in  1888. 

Ground-rent  at  5  per  cent  of   .       .       .  $333,000,000  $16,650,000 

Federal  taxes $4,500,000 

Local  taxes 10,000,000 

$14,500,000 
Deduct  taxes  on  land  values  already  paid       .       .       .  4,500,000 

Taxation  on  present  net  rents,  if  all  other  taxes  are     

repealed 10,000,000 

Surplus  rent $6,650,000 

Thus  all  national  and  local  taxes,  if  concentrated  upon  the 
ground-rents  actually  found  and  assessed  by  the  assessors  of 
Boston,  would  absorb  barely  60  per  cent  of  those  rents,  leaving 
Boston  land-owners  a  clear  income  of  over  $6,650,000  per  annum, 
besides  the  untaxed  income  from  buildings  and  other  improve- 
ments. 

Omissions  from  Boston  rents.  Thus  far  it  has  been  assumed  that  the 
figures  of  Boston  assessors,  upon  which  Mr.  Atkinson  relies,  correctly 
represent  the  market  value  of  all  Boston  land.     .     .     . 

But  it  is  not  necessary  to  enter  into  this  question  just  now.  Even 
accepting  the  official  assessment,  these  figures  show  upon  their  face 
that  the  assessors  have  omitted  from  their  estimates  of  land  values  in 
Boston  some  items  of  immense  importance.  Where  is  there  any  account 
made  of  the  privileges  conferred  over  and  under  Boston  streets,  upon 
railway,  telegraph,  telephone,  gas,  electric  light,  steam  heating  com- 
panies, etc.?  So  far  as  these  corporations  actually  own,  in  their  own 
names  and  of  record,  ofiices  and  buildings,  over  which  they  have  ex- 
clusive control,  like  any  other  private  land-owner,  such  property 
is  assessed,  but  only  at  the  same  rate  per  square  foot  as  other 
private  land.  But  not  one  dollar  of  the  value  of  the  franchises 
of  any  of  these  corporations,  or  of  the  privileges  which  they 
have  over  and  under  Boston  streets,  is  included  in  the  asses- 
sor's estimate  of  land  value.  This  will  appear  even  more  clearly 
upon  examination  of  the  assessor's  annual  reports.  Such  franchises 
and  privileges  are  never  assessed  under  the  head  of  "land"  in  any 
State  of  the  union. 


200  The  Value  of  the  Land  Pt.  Ill 

No  doubt  the  Boston  assessors  and  Mr.  Atkinson  were  astonished 
at  the  suggestion,  made  some  years  ago,  that  all  these  franchises  and 
privileges  come  within  the  definition  of  "land";  but  they  certainly  do, 
both  imder  the  principles  of  economic  science  and  under  the  plain 
terms  of  American  law.  They  are  "  hereditaments,"  ^  which  form  a 
part  of  *'  land"  under  both  Massachusettes^  and  New  York  law^  although 
exempted  from  taxation  by  statute  in  New  York,  and  by  the  dead  hand 
of  Chief  Justice  Shaw  in  Massachusetts. 

Applying  this  principle  to  railroad,  telegraph,  gas,  and  other 
corporate  privileges,  in  or  over  the  streets  of  Boston,  there  can 
be  no  doubt  that  the  land  values  appertaining  to  these  fran- 
chises would  be  eagerly  bid  for  at  $3,000,000  per  annum.  The 
whole  of  this  large  sum  is  entirely  omitted  from  the  ojQ&cial  esti- 
mate of  ground-rents  in  Boston;  and  therefore  at  twenty  years' 
purchase  the  land  of  Boston  has  been  undervalued  to  the  extent  of 
$60,000,000. 

This  estimate  is  confirmed  by  the  census  1890,  which  shows  that  the 
real  values  of  real  estate,  including  these  franchises,  were  nearly  30  per 
cent  higher  than  the  assessed  values  in  Massachusetts.  The  ofl5ciaI 
figures  for  Boston  alone  are  not  at  present  accessible;  but  there  is  every 
reason  for  believing  that  the  undervaluation  there  was  as  great  at  least 
as  in  the  rest  of  the  State,  since  Boston  has  more  valuable  franchises 
than  any  other  part  of  the  State.  In  view  of  these  facts  let  us  revise 
the  foregoing  table,  on  the  basis  of  an  addition  of  only  25  per  cent, 
instead  of  30  per  cent. 

Boston  Ground-rents  and  Taxes,  1888.    Corrected  by  Reference  to  Census. 

Ground-rent  assessed  as  such $16,650,000 

Correction  of  under-assessment  per  census    .       .       .  4,162,000 

$20,813,000 

Federal  taxes $4,500,000 

Local  taxes 10,000,000 

$14,500,000 
Deduct  taxes  on  land  values  already  paid  4,500,000 

Taxation  on  present  net  rents,  if  all  other  taxes  are  re- 
pealed    10,000,000 

Surplus  rents $10,812,000 

>  Smith  V.  New  York,  68  N.  Y.  SS2. 
«  Rev.  Stat.,  ch.  3.  }  7. 
» I  Rev.  Stat.,  7S0. 


Bk.  I  Land  Values  201 

The  concentration  of  all  taxation  upon  ground-rents,  in  Boston, 
would  not,  therefore,  absorb  as  much  as  48  per  cent  of  those  rents. 

Article  6  —  Summary. 

All  the  foregoing  calculations  have  been  made  without  any  precon- 
ceived theory  as  to  the  proportion  which  taxation  would  probably 
bear  to  rent,  and  without  any  anticipation  that  there  would  be  much 
uniformity  in  the  results  obtained  from  such  widely  separated  and 
widely  different  communities.  Let  us  now  compare  these  results,  reck- 
oning the  British  pound  at  $4.85. 


Net  ground- 

Additional 

Proportion 

rent,  less 

tax 

taken  by 

present  tax 

tax 

Great  Britain 

.     $    731,307,000 

$433,095,000 

59% 

United  States 

1,380,000,000 

616,748,000 

442% 

Pennsylvania 

140,500,000 

63,784,000 

45i% 

Connecticut 

18,475,000 

8,217,000 

44^% 

Boston 

20,812,000 

10,000,000 

48  % 

The  uniformity  of  result,  where  the  figures  are  based  upon  the  same 
census,  as  in  the  United  States  at  large,  Pennsylvania,  and  Connecticut, 
is  remarkable. 

In  Great  Britain  the  estimate  of  ground-rent  does  not  allow  a  dollar 
for  the  value  of  vacant  land  or  imoccupied  houses,  parks  or  pleasure 
grounds.  The  magnificent  estate  of  Chatsworth  is  rated  at  only  $3,000 
per  annum.  An  addition  of  one  third  to  the  values  included  above 
would  be  far  below  the  truth.  With  such  an  addition,  the  proportion 
of  taxes  to  British  rents  would  be  reduced  below  44I  per  cent. 

All  attainable  statistics  thus  point  to  the  conclusion  that  the  entire 
cost  of  the  most  expensive  and  even  extravagant  governments  in  civilized 
countries  could  be  placed  upon  ground-rents,  without  taking  in  taxation 
even  half  of  the  present  net  income  of  land-owners  from  that  source 
alone.' 

Section  IV —  Other  Estimates 

Article  i — Great  Britain  iSgg. 

The  foregoing  estimates  are  from  a  single  source;  one  more,  therefore, 
may  be  added  adopting  a  different  date  and  method.  The  United 
Kingdom  is  chosen,  and  the  returns  for  the  year  1899-1900,  preceding 
the  increase  in  taxation  rquired  by  the  Boer  War,  as  representing  the 


202  The  Value  of  the  Land  Pt.  Ill 

most  normal  year  of  a  later  decade.  The  fiftieth  number  of  the  Statis- 
tical Abstract  for  the  United  Kingdom  is  used  (1888-1902),  the  page 
given  refers  to  that  upon  which  the  returns  cited  may  be  found;  only 
round  numbers  are  presented. 

The  total  Imperial  revenue,  derived  from  taxes,  is  given  (p.  9)  in 
the  year  selected  as  nearly  £100,000,000.  Of  this  total  Imperial 
revenue  a  certain  amount  is  derived  from  funds  representing  ground- 
rents.  An  approximation  of  this  amount  might  be  reached  by  esti- 
mating the  total  Imperial  taxes  paid  by  real  estate  and  funds  invested 
in  land-using  corporations;  60  per  cent  of  this  amount  will  probably 
approximate  the  taxes  already  paid  by  ground-rents.  In  order  to 
estimate  the  amount  of  Imperial  taxes  contributed  by  real  estate,  it  is 
necessary  to  discover  what  proportion  of  the  income-tax  is  derived 
from  that  source.    This  be  suggested  as  follows: 

Schedule  A.  (p.  36)  gives  a  total  income  for  the  United  Kingdom  from 

the  ownership  of  lands,  houses,  and  so  forth  of  about    .       .       .     £228,000,000 

Schedule  B.  (p.  36)  from  the  occupation  of  land 17,000,000 

Schedule  D.  (p.  39)  total  derived  from  railways,  mines,  gas  works, 

water  works,  quarries,  markets,  toUs,  etc. 69,000,000 

Total  income  derived  directly  from  landed  interests       .       .       .     £314,000,000 

The  total  income  assessed  (p.  37)  is  about  £565,000,000;  the  total 
revenue  produced  (p.  37)  about  £19,000,000.  That  portion  of  the 
total  revenue  of  £19,000,000  produced  by  real  estate  might  be  estab- 
lished by  the  proportion: 

314  (Mil.  Ster.)  :  565  =  (10)  :  19. 

In  other  words,  the  income  derived  from  real  estate  (£314,000,000) 
will  be  to  the  total  income  (£565,000,000)  directly  as  the  revenue 
derived  from  real  estate  is  to  the  revenue  derived  from  total  income 
(£19,000,000).  This  proportion  suggests  that  about  £10,000,000  of 
the  income-tax  is  derived  from  landed  interests.  This  permits  the 
following  estimate: 

Total  Imperial  Taxes  Derived  from  Real  Estate. 

Estate,  etc.     Duties  (p.  9) £14,000,000 

Land-tax  (p.  9)       .       .       .       .'      .       .       .       .  800,000 

House  duty  (p.  9)           1,600,000 

Income-tax  derived  from  real  estate   ....  10,000,000 


Total  Imperial  taxes  from  real  estate  .        .       .       £26,400,000 

It  thus  seems  that  about  £26,400,000  of  the  Imperial  revenue  was 
derived  from  interest  coming  under  the  heading  real  estate,  or  landed 


Bk.  I  Land  Values  203 

interest.     Sixty  per  cent  of  this  amount  may,  therefore,  be  regarded 
as  having  been  contributed  from  ground-rents;  or  £1 5,840,000  of  Imperial 
taxes  as  derived  from  unimproved  land  values  in  the  year  selected. 
Attention  may  now  be  directed  to  local  taxes. 

Total  receipts  for  local  expenditure 

1899-1900  (p.  51) £122,000,000 

Deduct  Government  contributions    .       .     £16,000,000 

Loans 28,000,000         44,000,000 


£  78,000,000 

This  leaves  approximately  £78,000,000  as  the  amount  raised  by 
taxation  proper  derived  from  local  rates,  representing  water,  gas  and 
electric  light  undertakings,  tramways,  tolls,  rents,  sales  of  property 
and  so  forth. 

No  less  an  authority  than  Sir  Robert  Giffen^  may  be  cited  in  support 
of  the  opinion  that  the  entire  incidence  of  local  rates  falls  upon  ground- 
rents.  He  says:  "The  idea  of  the  separate  rating  of  ground  values 
arises  from  a  misunderstanding  of  the  real  incidence  of  rates.  As 
that  burden  falls  ab  initio  upon  the  ground  landlord,  diminishing  the 
sum  of  capital  or  income  he  is  able  to  obtain  for  his  property,  there 
is  really  no  separate  ground  value  to  be  assessed,"  If  this  is  the  actual 
incidence  of  rates,  as  many  authorities  believe,  it  follows  that  the  amount 
of  local  revenue  derived  from  ground-rents  is  100  instead  of  60  per 
cent  of  the  total  revenue.  Upon  this  supposition,  the  proportion  of 
both  Imperial  and  local  revenue  combined,  borne  by  ground-rents  at 
present,  would  be  much  greater  than  60  per  cent,  and  the  proportion  of 
present  net  rents,  necessary  to  assess,  in  order  to  raise  all  revenue  from 
that  one  source,  correspondingly  less.  But  limiting  the  percentage  of 
land  values  to  the  estimate  of  60  per  cent  of  real  estate,  the  following 
results  are  obtained;  60  percent  of  £78,000,000  or  £46,000,000  repre- 
senting the  amount  of  local  taxes  paid  by  ground-rents. 

Total  Derived  from 

revenue  ground-rents 

Imperial  taxes £100,000,000  £16,000,000 

Local  rates 78,000,000  46,000,000 


Total  tax  revenue        ....     £178,000,000      £62,000,000 
Derived  from  groimd-rents .        .       .         62,000,000 


£116,000,000 


^Memoranda  presented  to  the  Royal  Commission  on  Local  Taxation,  p.  q7,  cited  by  Professor  Smart. 
Taxation  of  Land  Values  and  the  Single  Tax,  p.  46. 


204  The  Value  of  the  Land  Pt.  Ill 

This  leaves  £116,000,00  to  be  assessed  upon  present  net  ground- 
rents  if  all  revenue  were  derived  from  these  values. 

It  now  remains  to  estimate  at  what  amount  present  ground-rents 
may  be  approximated.  This  may  be  done  by  taking  60  per  cent  of 
total  income  derived  from  real  estate.  This  total  has  already  been 
estimated  at  £314,000,000,  60  per  cent  of  which  is  £188,000,000,  a 
conservative  amount  at  which  to  set  the  present  net  ground-rents  of 
the  United  Kingdom.  The  foregoing  estimates  may  therefore  be  sum- 
marized as  follows: 

United  Kingdom. 

Total  tax  Net  ground-rents  Additional  Proportion  of 

revenue  (less  present  tax)  assessment  rent  assessed 

£178,000,000  £188,000,000  £116,000,000  61  per  cent 

Net  ground-rents    ....     £188,000,000 
Assessment 116,000,000 


Surplus  ground-rents     .       .       .       £72,000,000 

In  the  year  1899- 1900  the  entire  revenue,  Imperial  and  local,  could 
apparently  have  been  raised  from  the  value  of  unimproved  land,  or 
economic  rent,  and  still  have  left  £72,000,000  of  socially  created  wealth 
in  the  hands  of  individuals,  together  with  the  untaxed  revenue  from 
houses  and  improvements. 

It  is  unnecessary  to  add  to  the  number  of  these  estimates;  they  may 
be  made  for  any  city,  state  or  country,  where  the  data  is  available. 
In  any  systematic  study,  however,  care  should  be  taken  to  obtain  the 
real  value  of  the  unimproved  land.  This  real  annual  value  is  usually 
at  least  equal  to  the  assessed  annual  value;  plus  the  annual  value  of 
the  franchises  of  all  land-using  corporations;  plus  60  per  cent  of  the 
annual  taxes  already  paid  by  total  real  estate.  The  sum  of  these  annual 
values  will  approximate  the  true,  or  untaxed,  annual  value  of  the  un- 
improved land,  or  gross  economic  rent.  This  gross  rent  may  then  be 
compared  with  the  total  revenue.  If,  for  example,  it  is  desired  to 
discover  the  gross  economic  rent  of  the  United  Kingdom,  to  the  pres- 
ent net  ground-rent  should  be  added  all  taxes  paid  by  these  rents  at 
present.    The  estimates  of  the  previous  illustrations  show: 

United  Kingdom  —  Economic  Rent. 

Present  net  ground- rents £188,000,000 

Taxes  already  paid  by  ground-rents    ....         62,000,000 

Total  untaxed  or  economic  rent  ....     £250,000,000 


Bk.  I 


Land  Values 


205 


This  gross,  or  economic,  rent  may  be  compared  with  the  total  revenue 
of  £178,000,000  leaving  £72,000,000  of  economic  rent  untouched,  were 
all  revenue  derived  from  the  land. 

Or,  again,  as  in  the  illustrations  presented,  taxes  already  paid  by 
unimproved  land  —  that  is,  60  per  cent  of  taxes  borne  by  total  real 
estate,  may  be  deducted  from  total  taxes,  and  the  remainder  may 
approximate  the  amount  to  be  assessed  upon  present  net  ground-rents 
in  a  direct  fiscal  system,  based  upon  socially  created  wealth  alone. 

Article  2  — Other  Countries. 

Without  carrying  detailed  calculations  any  farther,  it  may  be  of 
interest  to  attempt  to  discover  to  what  extent  those  presented  apply 
to  other  countries.  This  may  be  done  through  a  study  of  the  relations 
existing  between  total  property  and  real  estate,  total  earnings  and  tax- 
burden. 

If  these  relations  in  a  number  of  different  societies  present  no  f unda  ■ 
mental  distinctions  between  the  same  relations  in  the  countries  con- 
sidered, there  seems  ground  for  the  opinion  that  the  annual  value  of 
economic  rent  more  or  less  approximates  the  same  relation  to  revenue 
in  other  countries  as  in  those  examined. 

The  following  table  ^  presents  an  approximation  of  the  relations 
of  tax  burden  to  total  earnings. 


Earnings 

Millions 

£. 


United  Kingdom    ....  1,423 

France 1,199 

Germany 1,284 

Russia 1,004 

Austria 707 

Italy 436 

Spain 273 

Other  states 816 

Europe 7,142 

United  States          ....  3, 116 

Total 10,258 


Million  £  Sterling 


Nat. 
Taxes. 


79 
102 

8S 
84 
69 
56 
29 
52 

5S6 
65 

621 


Local. 


43 
42 

45 
II 

15 

27 

7 
28 

218 


316 


Total. 


122 

144 
130 

95 
84 
83 
36 
80 

774 
163 

937 


Ratio 

of 

Tax. 


8.6 

12. 0 
lO.I 

9-5 
II. 9 
19.0 

9.8 

10.8 

5-2 

9.1 


The  following  table  presents  the  approximate  relation  of  real  to  total 
property  in  the  countries   named.      It  may  be  found  in^Mulhall's 

'  Mulhall's  Industries  and  Wealth  of  Nations,  p.  53. 


2o6  The  Value  of  the  Land  Pt.  Ill 

Industries  and  Wealth  of  Nations^.     The  proportions  have  here  been 
roughly  transposed  from  diagrammatic  to  numerical  relations. 

Proportion  of  Real  to  Total  Property. 

United    Kingdom    .       .       .       •  35  per  cent. 

France 50  per  cent. 

Germany  .         .....  45  per  cent. 

United  States 49  per  cent. 

Russia 50  per  cent. 

Austria 50  per  cent. 

Italy 52  per  cent. 

Spain 55  per  cent. 

Holland 49  per  cent. 

Belgium 50  per  cent. 

Australia 37  per  cent. 

Canada 37  per  cent. 

Average 46  per  cent. 

These  relations  between  total  and  real  property,  total  earnings  and 
total  expenditure,  apparently  show  that  economic  rent  does  not  fall 
below  the  administrative  requirements  of  a  society.  Such  relations 
lead  but  to  approximate  opinion;  the  fairly  constant  nature  of  the 
series  seems,  however,  not  without  significance. 

In  any  attempt  to  estimate  the  value  of  unimproved  land  in  any 
city,  state,  or  country,  it  should  be  remembered  that  the  available 
returns  in  many  cases  do  not  present  the  necessary  material;  or  the 
material  presented  may  be  misleading.  For  example;  in  New  Zealand 
the  value  of  the  unimproved  land  is  returned^  at  about  £95,000,000 
for  1902.  The  general  taxes  for  that  year  amounted  to  about  £6,000,000 
from  which  £3,000,000  may  be  deducted  as  derived  from  state  owned 
railways,  post-offices  and  so  forth,  leaving  £3,000,000  to  be  added  to 
about  £2,500,000  of  local  revenue;  a  total  tax  revenue  of  about  £5,500,- 
000.  At  twenty  years'  purchase  the  annual  value  of  the  unimproved 
land  returned  would  be  but  £4,750,000.  Under  the  Land  and  Income 
Assessment  Act  of  1900,  there  was  an  ordinary  land-tax  on  the  actual 
value  of  the  land,  and  an  income-tax.  Mortgages  are  subject  to  the 
land-tax  at  the  rate  of  id.  in  the  pound.  In  addition  to  the  ordinary 
land-tax  there  is  a  graduated  tax  on  land,  rising  from  one  eighth  of  a 
penny  in  the  pound  on  values  from  £5,000  to  £10,000,  up  to  twopence 
in  the  pound  on  values  of   £210,000  and  upward.^     Yet,  even  with 

»  Plate  XXV,  p.  52. 
•  Statesman's  Year  Book,  1904,  p.  366. 
t«  Ibid.,  pp.  364,  365. 


Bk.  I  Land  Values  207 

allowance  for  the  exceptional  incidence  of  these  taxes  upon  unimproved 
values,  the  amount  returned  as  such  may  not  approximate  what  seems 
to  be  the  normal  relation  as  established  by  the  returns  of  England  and 
the  United  States.  If  this  is  the  case,  it  is  necessary  to  inquire  whether 
the  item  returned  as  unimproved  land  represented  unoccupied  land 
alone  —  that  is,  did  not  include  land  occupied  by  improvements.  These 
are  returned  at  about  £60,000,000;  this  estimate  may  include  improve- 
ments and  sites.  If  this  is  the  case,  60  per  cent  of  these  £60,000,000, 
should  be  added  to  the  £95,000,000,  in  order  to  reach  a  closer  approxi- 
mation of  the  real  value  of  the  land.  It  is  also  necessary  to  inquire 
whether,  in  the  values  returned,  any  account  had  been  taken  of  the 
values  of  the  franchises  of  land-using  corporations,  and  not  until  these 
had  been  estimated  and  added  to  the  other  values  can  even  an  approxi- 
mation to  the  real  value  of  the  land  be  obtained. 

These  estimates  suggest  that  the  annual  value  of  economic  rent  in 
any  society  is  generally  in  excess  of  the  social  expenditure;  or,  to  present 
a  closer  relation,  that  the  entire  expenditure  of  the  societies  considered 
might  have  been  met  in  the  years  selected  by  an  increased  assessment 
of,  approximately,  50  per  cent  u^Don  the  present  net  value  of  the  un- 
improved rents. 


Book  II 
THE  TRANSITION 

CHAPTER  I 

THE  LAND  AND  SOCIETY    ' 

THE  annual  value  of  unimproved  land,  or  ground-rents,  has 
long  been  recognized  as  personal  property.  These  values, 
moreover,  may  represent  capital  recently  invested,  and  in 
many  instances  appear  in  the  form  of  corporate  wealth,  which, 
through  institutions  of  trust,  exerts  a  wide  influence  throughout  the 
industrial  life  of  a  population.  The  absorption  of  such  property  by  the 
State  suggests  two  questions :  one,  with  reference  to  the  right  of  society 
to  take  such  a  step,  and  another,  with  reference  to  its  economic  con- 
sequences. The  questions  here  occur,  whether  the  absorption  of  land 
values  does  not  require  illegitimate  confiscation  of  private  property; 
whether  society  should  compensate  owners  affected;  and  whether  the 
financial  difficulties  in  such  a  change  would  not  outweigh  the  anticipated 
advantages.  In  other  words,  whether  a  system  of  transposition  may  be 
conceived  which  does  not  present  too  great  danger  in  its  effect  upon  the 
industrial  and  financial  life  of  a  society. 

The  following  passage  from  Blackstone^  may  be  cited  with  reference  to 
the  right  of  society  over  the  land  it  occupies.  "There  is  nothing  which 
so  generally  strikes  the  imagination,  and  engages  the  affections  of  man- 
kind, as  the  right  of  property;  or  that  sole  and  despotic  dominion  which 
one  man  claims  and  exercises  over  the  external  things  of  the  world,  in 
total  exclusion  of  the  right  of  any  other  individual  in  the  universe.  And 
yet  there  are  very  few  that  will  give  themselves  the  trouble  to  consider 
the  original  and  foundation  of  this  right.  Pleased  as  we  are  with  the 
possession,  we  seem  afraid  to  look  back  to  the  means  by  which  it  was 
acquired,  as  if  fearful  of  some  defect  in  our  title;  or  at  best  we  rest 
satisfied  with  the  decision  of  the  laws  in  our  favour,  without  examining 

>  Blackstone'g  Commentaries  on  the  Laws  of  England,  Bk.  £[.,  cb.  i.,  p.  x.    ' 

208 


Bk.  II  The  Land  and  Society  209 

the  reason  or  authority  upon  which  these  laws  have  been  built.  We 
think  it  enough  that  our  title  is  derived  by  the  grant  of  the  former  pro- 
prietor, by  descent  from  our  ancestors,  or  by  the  last  will  and  testament  of 
the  dying  owner;  not  caring  to  reflect  that  (accurately  and  strictly  speak- 
ing) there  is  no  foundation,  in  nature  or  in  natural  law,  why  a  set  of  words 
upon  parchment  should  convey  the  dominion  of  land:  why  the  son 
should  have  a  right  to  exclude  his  fellow-creatures  from  a  determinate 
spot  of  groimd,  because  his  father  had  done  so  before  him:  or  why  the 
occupier  of  a  particular  field  or  of  a  jewel,  when  lying  on  his  death-bed, 
and  no  longer  able  to  maintain  possession,  should  be  entitled  to  tell  the 
rest  of  the  world  which  of  them  should  enjoy  it  after  him.  These  in- 
quiries, it  must  be  owned,  would  be  useless  and  even  troublesome  in 
common  life.  It  is  well  if  the  mass  of  mankind  will  obey  the  laws  when 
made,  without  scrutinizing  too  nicely  into  the  reason  for  making  them. 
But  when  law  is  to  be  considered  not  only  as  a  matter  of  practice,  but 
also  as  a  rational  science,  it  cannot  be  improper  or  useless  to  examine 
more  deeply  the  rudiments  and  grounds  of  these  oositive  constitutions 
of  society. 

"  In  the  beginning  of  the  world,  we  are  informed  by  holy  writ,  the  all- 
bountiful  Creator  gave  to  man  'dominion  over  all  the  earth,  and  over  the 
fish  of  the  sea,  and  over  the  fowl  of  the  air,  and  over  every  living  thing 
that  moveth  upon  the  earth.'  This  is  the  only  true  and  solid  foundation 
of  man's  dominion  over  external  things,  whatever  airy  metaphysical 
notions  may  have  been  started  by  fanciful  writers  upon  this  subject. 
The  earth,  therefore,  and  all  things  therein,  are  the  general  property  of 
all  mankind,  exclusive  of  other  beings,  from  the  immediate  gift  of  the 
Creator." 

Thus,  in  seeking  the  ultimate  foundations  upon  which  property  rights 
in  land  repose,  the  position  is  met,  stated  in  Blackstone's  words,  that  the 
earth  is  the  "general  property  of  all  mankind."  It  seems  necessary, 
therefore,  to  accept  the  administrative  decisions  of  society  as  the  inter- 
pretation, of  these  rights,  from  which  there  is,  apparently,  no  appeal. 

Without  going  into  elaborate  discussion  of  Roman  law  in  connexion 
with  land,  it  may  be  said  that  modern  European  systems  of  land  tenure 
are  derived  from  Rome  through  the  feudal  systems,  which  involved  the 
holding  of  land  upon  condition  of  certain  payments  to  the  Crown,  or  to 
society.  These  payments  often,  in  fact  nearly  always,  took  the  form 
of  military  service.    Blackstone  ^  may  again  be  cited :  * '  The  other  ancient 

*  Ibid.    Bk.  I.,  cb.  viii.,  pp.  3og-3io. 


2IO  The  Transition  Pt.  Ill 

levies  were  in  the  nature  of  the  modern  land-tax:  for  we  may  trace  up  the 
original  of  that  charge  as  high  as  to  the  introduction  of  our  military 
tenures:  when  every  tenant  of  a  knight's  fee  was  bound,  if  called  upon,  to 
attend  the  king  in  his  army  for  forty  days  in  every  year.  But  this 
personal  attendance  growing  troublesome  in  many  respects,  the  tenants 
found  means  of  compounding  it,  by  first  sending  others  in  their  stead, 
and  in  process  of  time  by  making  a  pecuniary  satisfaction  to  the  crown 
in  lieu  of  it.  This  pecuniary  satisfaction  at  last  comes  to  be  levied  by 
assessments,  at  so  much  for  every  knight's  fee,  under  the  name  of  scut- 
ages;  which  appear  to  have  been  levied  for  the  first  time  in  the  fifth 
year  of  Henry  the  Second,  on  account  of  his  expedition  to  Toulouse,  and 
were  then,  I  apprehend,  mere  arbitrary  compositions,  as  the  King  and  the 
subject  could  agree.  ...  Of  the  same  nature  with  scutages  upon 
knight's  fees  were  the  assessments  of  hydage  upon  all  other  lands,  and  of 
talliage  upon  cities  and  burghs.  But  they  all  gradually  fell  into  disuse 
upon  the  introduction  of  subsidies,  about  the  time  of  King  Richard  II. 
and  King  Henry  IV.  .  .  .  By  a  variety  of  statutes  under  Edward  I. 
and  his  grandson,  it  was  provided  that  the  King  shall  not  take  any  aids 
or  tasks,  any  talliage  or  tax,  but  by  the  common  assent  of  the  great  men 
and  Commons  in  Parliament." 

But  one  result  could  be  expected  from  these  changing  conditions:  a 
slow  but  no  less  certain  shifting  of  original  public  burdens  from  the  land 
to  the  people.  The  feudal  system,  which  as  Blackstone^  says,  Sir 
Henry  Spelman  does  not  scruple  to  call  the  "law  of  nations  in  our  west- 
ern world,"  required  the  systematic  allotment  of  lands  in  return  for  ser- 
vice rendered  to  the  community.  "  These  allotments  were  called /eoJa, 
feuds,  fiefs,  or  fees;  which  last  appellation  in  the  northern  language  sig- 
nifies a  conditional  stipend  or  reward.  Rewards  or  stipends  they  evi- 
dently were,"  says  Blackstone,  "and  the  condition  annexed  to  them  was, 
that  the  possessor  should  do  service  faithfully,  both  at  home  and  in  the 
wars,  to  him  by  whom  they  were  given ;  for  which  purpose  he  took  the 
jur amentum  fidelitatis,  or  oath  of  fealty:  and  in  case  of  the  breach  of 
this  condition  and  oath,  by  not  performing  the  stipulated  service,  or 
by  deserting  the  lord  in  battle,  the  lands  were  again  to  revert  to  him  who 
granted  them." 

The  feudal  system,  in  its  original  form,  thus  derived  a  large  portion 
of  the  national  resources  from  the  land;  and  this  portion,  with  changing 
conditions,  has  been  much  diminished,  until  out  of  relation  to  the  orig- 

*Ibid.     Bk.  II.,  ch.  iv.,  pp.  43>  45- 


Bk.  II  The  Land  and  Society  211 

inal  obligations.  Says  Cobden/  in  this  connexion:  "For  a  period  of 
one  hundred  and  fifty  years  after  the  conquest,  the  whole  of  the  revenue 
of  the  country  was  derived  from  the  land.  During  the  next  hundred 
and  fifty  years  it  yielded  nineteen  twentieths  of  the  revenue  —  for  the 
next  century  down  to  the  reign  of  Richard  III,  it  was  nine  tenths. 
During  the  next  seventy  years  to  the  time  of  Mary  it  fell  to  about  three 
fourths.  From  this  time  to  the  end  of  the  Commonwealth,  land  appeared 
to  have  yielded  one  half  the  revenue.  Down  to  the  reign  of  Anne,  it  was 
one  fourth.  In  the  reign  of  George  I  it  was  one  fifth.  In  George  the 
Second's  reign,  it  was  one  sixth.  For  the  first  thirty  years  of  George  the 
Third's  reign,  the  land  yielded  one  seventh  of  the  revenue.  From  1 793  to 
18 1 6  (during  the  period  of  the  property  tax)  land  contributed  one  ninth. 
From  that  time  to  the  present,  one  twenty-fifth  only  of  the  revenue  had 
been  derived  directly  from  land.  Thus  the  land,  which  anciently  paid 
the  whole  of  taxation,  paid  now  only  a  fraction  or  one  twenty-fifth,  not- 
withstanding the  immense  increase  that  had  taken  place  in  the  value  of 
the  rentals.  The  people  had  fared  better  under  the  despotic  monarchs 
than  when  the  powers  of  the  state  had  fallen  into  the  hands  of  a  landed 
oligarchy,  who  had  first  exempted  themselves  from  taxation,  and  next 
claimed  compensation  for  themselves  by  a  corn  law  for  their  heavy  and 
peculiar  burdens." 

Again,  between  land  and  other  forms  of  property,  there  exists  a  fun- 
damental difference;  a  difference  which  suggests  that  "  equity  and  right 
reason"  demand  administrative  distinctions  between  land  and  other 
wealth.  Says  Judge  Arthur  O'Conner^  K.  C,  with  reference  to  this 
distinction : 

"Now,  between  land  and  every  other  form  of  property  there  is  an 
obvious,  abiding,  and  essential  difference.  Every  other  form  of  prop- 
erty is  transitory,  wasting  and  destructible,  the  temporary  production  of 
human  industry,  obtained  by  labour  out  of  the  material  which  the  land 
supplies;  but  the  land  is  not  of  human  production :  and  as  no  man  made 
it  so,  no  man  can  destroy  it;  'no  man,  however  feloniously  inclined, 
can  run  away  with  an  acre  of  it.'  Man's  very  body  is  built  up  of  its 
substance;  he  is  taken  from  it,  and  will  return  to  it;  while  he  lives, 
he  must  live  and  labour  on  its  surface.  Equity  and  right  reason  would 
appear  to  suggest  that  the  product  of  human  industry  should  be  the 
absolute  property  of  the  person  or  persons  that  created  it,  whether  the 

'  Speech  in  the  House  of  Commons,  Monday  evening,  March  14th,  1842. 
*  Final  Report  of  the  Royal  Commission  on  Local  Taxation,  p.  179. 


212 


The  Transition  Pt.  Ill 


creation  be  of  food,  or  habitation,  or  instrument,  or  any  other  thing. 
But  with  land  it  is  different.  Equity  and  right  reason  here  suggest  that, 
as  access  to  the  face  of  the  globe  is  for  mankind  a  necessary  condition  of 
existence,  and  yet  land  is  incapable  of  creation  by  human  industry,  the 
same  ride  of  absolute  and  exclusive  ownership  cannot  apply.  On  the 
point  the  law  of  England  is  in  accord  with  common  sense;  and  according 
to  that  law,  land  is  not  the  subject  of  absolute  property.  '  No  man  is,  in 
law,  the  absolute  owner  of  lands.  He  can  only  hold  an  estate  in  them,» 
and  that  estate  he  holds  under  the  Crown  as  representative  of  the 
community. 

"It  is  then  in  accordance  at  once  with  reason,  equity,  and  the  law,  to 
say  that  England  belongs  to  the  English;  that  the  land  of  England,  with 
all  that  is  beneath  its  surface,  and  all  that  it  produces  by  the  unassisted 
force  of  nature  belongs  to  the  people  of  England.  Whatever  may  at 
any  time  be  the  authorised  occupation  of  its  surface,  or  any  part  of  it, 
however  turned  to  accoimt  —  well  or  ill,  or  not  at  all  —  however  its 
resources,  in  whatever  hands,  may  be  developed  or  neglected,  it  is  true 
to  say  collectively  that  the  land  of  England  belongs  to  the  people  of 
England." 

The  following  conclusions  are  thus  suggested: 

1.  The  ownership  of  land  is  finally  vested  in  the  society  which 
occupies  it. 

2.  The  administrative  decisions  of  society,  through  its  authorized 
representatives,  are  the  only  interpretation  of  this  right  of 
ownership. 

3.  The  right  of  society  to  assess  contributions  upon  the  land  under 
its  jurisdiction  is  not  only  complete,  but  the  foundation  of  present 
system  of  land  tenure. 

It  seems  unessential  to  extend  inquiry  farther.  European  systems 
are  derived  through  the  feudal  system  from  a  common  origin  in  Rome. 
Eastern  systems  seem  more  or  less  analogous  to  earlier  European 
methods. 


CHAPTER    II 

THE    DIRECT    ASSESSMENT     OF     LAND    VALUES 
CONFISCATION   AND  COMPENSATION 

j4  NOTHER  question  demanding  attention  refers  to  the  economic 
/%  eSects  of  devoting  to  social  purposes  values  recognized  as 
/  %  private  property  for  generations;  values,  moreover,  which 
form  the  basis  for  an  incalculable  number  of  other  values,  and 
consequently,  enter  into  the  industrial  and  financial  fabric  of  society. 
Unimproved  land  values,  again,  are  almost  as  varied  in  nature  as  any 
other  form  of  property;  and,  in  consequence,  present  proportionately 
varied  subjects  for  fiscal  attention.  Great  tracts  in  the  entailed  owner- 
ship of  a  noble  family,  or  appropriated  by  capitalist  or  corporation,  in 
the  early  days  of  a  community's  existence  and  representing  a  large 
unearned  increment,  do  not  present  the  same  kind  of  value  as  the  land 
owned  and  used  by  the  agriculturist,  or  recently  purchased  at  its  full 
value  with  the  savings  of  labour  and  industry.  Other  difl&culties  arise. 
The  following  table  shows  that  in  England  the  smaller  holdings  of  land 
are  divided  among  a  much  greater  number  of  individuals  than  the  larger 
holdings. 

Distribution  of  Land.^ 

1,000  persons  own  about  30,000,000  acres  averaging  30,000  each. 

4,000       "  "         "       20,000,000      "  "  SjOoo     " 

10,000       "  "         "       10,000,000      "  "  1,000     " 

50,000       "  "         "        9,000,000      "  "  130     " 

130,000      "  "         "         1,750,000      "  "  13     " 

Increased  assessments  upon  the  larger  holdings  of  one  person  require 
the  proportionate  assessment  of  the  smaller  holdings  of  a  great  number  of 
persons.  Thus,  estimates  showing  the  anomalies  of  the  present  system 
may  be  used  to  show  that  in  order  to  reach  socially  created  wealth,  in 
the  hands  of  a  few  freeholders,  it  is  necessary  to  tax  a  disproportionate 
number  of  smaller  holdings.  These  considerations  invite  others.  When 
it  is  understood  that  the  smaller  holdings  change  hands  much  of  tener  than 

^English  and  Irish  Land  Question,  p.  2.,  Mr.  Shaw  Lefevre,  M.  P.,  quoted  from  Herbert  Spencer 
on  the  Land  Question,  p.  25. 

213 


214  The  Transition  Pt.  Ill 

the  larger,  and  therefore  represent,  actually  and  relatively,  less  increased 
value  in  the  possession  of  the  owners,  and  may,  in  many  instances, 
represent  no  increased  value,  conditions  are  met  which  may  make  the 
most  enthusiastic  advocate  of  land  taxation  pause.  As  Mr.  Spencer  ^ 
once  wrote,  "had  we  to  deal  with  the  parties  who  originally  robbed  the 
human  race  of  its  heritage,  we  might  make  short  work  of  the  matter. 
But,  unfortunately,  most  of  our  present  land-owners  are  men  who  have 
either  mediately  or  immediately  —  either  by  their  own  acts  or  by  the 
acts  of  their  ancestors  —  given  for  their  estates  equivalents  of  honestly 
earned  wealth,  believing  that  they  were  investing  their  savings  in  a  legit- 
imate manner.  To  justly  estimate  and  liquidate  the  claims  of  such,  is 
one  of  the  most  intricate  problems  Society  will  one  day  have  to  solve." 

Does  this  problem  admit  of  solution?  Is  there  any  method,  capable 
of  practical  application,  which  will  permit  the  absorption  by  society  of 
socially  created  wealth  without  injustice  to  owners  of  land  representing 
no  such  wealth?  In  other  words,  is  it  possible  to  distinguish  between  the 
earned  and  unearned  value  of  the  land?  Can  land,  which  has  returned 
its  original  cost  many  times  over  to  its  possessors,  and  which  may  be 
worth  as  many  times  the  original  outlay  to-day,  be  distinguished  from 
land  purchased  but  yesterday  at  its  full  value,  representing  the  savings 
and  labour  of  a  life  time? 

Two  urban  land-owners  may  hold  properties  side  by  side;  one  an 
inheritance,  entailed  for  generations,  representing  thousands  or  millions 
in  increased  values,  due  to  social  causes;  the  other,  perhaps,  funds  re- 
cently invested,  held  by  fiduciary  organization  or  trustee;  can  these 
values  be  proportionately  estimated  and  assessed?  Can  the  land  priv- 
ileges of  a  great  and  long  established  corporation,  be  fairly  valued  and 
assessed  in  the  same  way  and  at  the  same  rate  as  the  recently  acquired 
holding  of  the  peasant  proprietor? 

Such  questions  demand  definite  answers;  generalized  considerations 
fail  to  meet  them.  They  must  be  met  with  specific  replies,  if  the  sub- 
ject of  using  social  wealth  for  social  needs  is  ever  to  have  a  hearing  by 
the  majority  of  the  middle  classes;  moreover,  its  ultimate  acceptance 
or  rejection,  like  that  of  all  other  political  institutions,  depends  upon 
these  middle  classes,  not  only  on  account  of  equity  and  right  reason, 
but  because  of  the  important  pecuniary  interests  involved.  In  no 
country  is  the  land  all  held  by  dukes,  capitalists,  and  great  corporations; 
a  glance  at  the  list  of  English  holdings,  which  represent  perhaps  the 

'Ibid.,  p.  2a,  reprinted  from  Social  Statics,  1851. 


Bk.  II         The  Direct  Assessment  of  Land  Values  215 

greatest  concentration,  shows  that  190,000  taxpayers  hold  1,000  acres 
or  less,  while  only  5,000  possess  larger  holdings.  An  increased  assess- 
ment upon  5,000  holdings,  involves  an  analogous  step  with  reference 
to  190,000,  while  the  latter  may  represent  a  smaller  amount  of  socially 
created  wealth,  both  actually  and  relatively,  or  no  such  wealth  at  all. 

These  considerations  present  one  of  the  greatest  diflBculties  in  the  ap- 
plication of  social  wealth  to  social  needs.  If  the  "unearned  increment,'' 
in  the  hands  of  the  great  corporation  or  city  landlord,  is  to  be  assessed 
and  absorbed  by  society,  how  can  that  value  invested  in  land,  repre- 
senting full  purchase  price  and  no  "unearned  increment,"  be  pro- 
portionately valued  and  assessed;  or,  rather,  proportionately  escape 
assessment?  The  absorption  of  the  one  involves  the  exemption  of  the 
other  to  a  certain  extent;  the  first  representing  value  given  to  the 
land  by  the  community,  for  which  nothing  has  been  paid;  the  other, 
on  the  contrary,  the  full  market  price  of  such  value,  very  dearly  paid, 
perhaps,  by  labour  and  industry. 

Mill^  meets  the  difficulty  by  suggesting  the  recognition  of  values 
existing  at  a  given  date,  and  the  subsequent  assessment  of  increased 
values.  Such  a  suggestion  is  open  to  objections;  chief  among  which 
are  its  complexity,  the  opportunity  for  fraud,  and  the  fact  that  it  takes 
no  note  of  existing  disparities  in  the  control  of  socially  created  wealth. 
The  following  is  another  method: 

The  direct  assessment  of  imimproved  land  values  is  open  to  the 
objection  of  unequal  burden  imposed,  on  account  of  the  difference  in 
the  nature  of  these  values.  Many  of  those  differences  may  be  referred 
to  differences  in  period  of  tenure;  land  held  for  a  long  period  usually 
representing  a  more  or  less  proportionate  increase  in  value,  as  com- 
pared with  land  recently  purchased.  Two  pieces  of  adjoining  urban 
property  may  be  considered.  One,  inherited  by  a  great  proprietor,  has 
returned  its  original  cost  many  times  over  in  rent,  and  still  represents 
many  times  the  original  outlay  in  its  present  market  price,  the  other 
property,  supposedly  but  recently  purchased  at  its  full  value,  with 
savings  or  funds  of  an  institution  of  trust.  The  values  of  the  two 
properties  may  be  regarded  as  equal,  but  it  is  evident  that  the  same 
contribution  from  each  brings  different  burdens  to  their  owners;  the 
first  owner  being  in  possession  of  many  times  the  original  investment, 
both  in  rent  already  paid  and  still  existing  values;  the  second  owner, 
possessing  his  original  investment  alone.    Contribution  assessed  upon 

^Principles  of  Political  Economy.     Bk.  V.,  ch.  ii.,  §  j.  p.  493. 


2i6  The  Transition    ^  Pt.  Ill 

the  first  property  is,  in  the  opinion  of  Mill,  "liable  to  no  valid  objection"; 
these  values,  to  cite  the  same  authority  ^  again,  holding  the  principal 
place  as  " fit  subjects  for  pecuHar  taxation! "  In  assessing  and  absorbing 
such  values  as  these,  the  society  does  not  withdraw  property  from  the 
hands  of  individuals;  it  ceases  to  continue  a  process  of  contribution. 
No  question  arises,  apparently,  with  reference  to  either  confiscation  or 
compensation,  the  society  simply  ceases  to  contribute  the  wealth  which 
it  creates  to  its  individual  members.  On  the  other  hand,  absorption 
of  the  second  value  is  in  no  way  in  harmony  with  either  justice  or 
right  reason;  for  not  only  is  the  individual  in  possession  of  no  socially 
created  wealth,  but  the  society,  in  checking  ground-rents,  seems  to 
repudiate  obligations  it  has  tacitly  assumed;  and  may  create  great 
financial  confusion  in  so  doing.  How  then,  may  this  difficulty  be 
bridged? 

It  is  obvious  that  no  alteration  in  existing  fiscal  systems  could  be 
wisely  contemplated,  except  as  a  measure  adopted  with  care,  and  rep- 
resenting a  gradual,  thoroughly  regulated,  process;  extending  over  a 
period  of  time  as  long  as  necessary,  occupying  perhaps  the  life  of  a 
generation  or  longer,  if  desirable.  There  would  thus  occur  a  slow  and 
progressive  absorption  of  land  values  from  a  small  percentage  of  their 
total  until  complete.  This  progressive  process  may  be  carried  on  in 
different  ways:  either  all  unimproved  values  could  be  brought  at  once 
under  fiscal  influence,  or  they  could  be  divided  into,  say,  ten  classes, 
representing  ten  different  periods  of  tenure;  that  is,  classes  based  upon 
date  of  title;  the  first  class  including  the  oldest  titles  to  the  use  of  land 
at  present  in  force,  the  tenth  class  the  most  recent.  The  intermediate 
classes  would  represent  intermediate  titles,  classified  with  reference 
to  date  of  possession.  In  this  way,  the  older  titles,  representing  in 
the  majority  of  cases,  the  greater  amount  of  unearned  increment, 
could  be  first  assessed;  while  the  later  titles  could  be  exempt  from 
contribution  for  any  satisfactory  period.  Thus,  if  lo  per  cent  were 
the  amount  first  assessed  upon  the  oldest  titles,  after  a  given  period, 
lo  per  cent  would  be  assessed  upon  the  second  division  and  20  upon 
the  first;  after  the  lapse  of  the  next  period,  30  per  cent  of  the  oldest 
rents  could  be  absorbed  and  10  per  cent  of  the  values  in  the  third  class. 
When  100  per  cent  had  been  reached  in  the  older  titles,  the  process 
ceases  and  the  later  values  would  gradually  fall  under  the  same  system. 

A  plan  of  this  nature  might  eliminate  certain  difficulties.     The  ques- 

1  rrinciples  of  Political  Economy.     Bk.  V.,  ch.  iii.,  §  6,  p.  502. 


Bk.  II       The  Direct  Assessment  of  Land  Values  217 

tion  of  compensation  to  the  more  recent  land-owners  would  apparently 
right  itself  for  the  following  reasons.  The  two  adjoining  urban  prop- 
erties may  again  be  considered:  the  land  values  of  the  first  property 
might  be  in  the  first  class  with  reference  to  title;  those  of  the  second  in 
the  tenth  class.  Two  and  one  half  years  may  be  adopted  as  the 
period  of  assessment  and  10  per  cent  the  amount  assessed.  The  first 
property,  upon  the  adoption  of  a  direct  fiscal  system,  would  be  assessed 
at  once  10  per  cent  of  its  unimproved  rental  vaue,  and  its  market  value 
would  be  proportionately  diminished.  On  the  other  hand,  the  land  of 
the  second  property  would  be  exempt  and  need  not  diminish  in  value; 
it  might,  on  the  contrary,  relatively  increase  in  value.  Thus,  the 
action  of  a  slow  and  progressive  system  need  inflict  no  loss  on  recent 
land-owners.  After  a  period  of  two  and  one  half  years,  the  older  prop- 
erty would  contribute  20  per  cent  of  its  unimproved  rental  value,  and 
not  until  twenty-five  years  have  elapsed  would  the  newer  property 
be  taxed  at  all,  and  then  only  to  the  extent  of  10  per  cent  of  its  site 
value;  not  until  fifty  years  had  passed,  w^ould  it  be  paying  as  much 
the  adjoining  property.  During  that  time,  the  land  might  change 
hands  many  times;  the  first  owner,  owing  to  the  exemption  of  his  land 
from  tax  burdens,  perhaps  being  able  to  sell  at  a  profit.  Subsequent 
owners,  being  conscious  of  what  contribution  they  would  be  expected 
to  pay,  would  govern  their  prices  accordingly. 

There  are  certain  objections  to  this  method  not  to  be  overlooked. 
The  most  important  is,  that  precedence  in  title  need  not  represent 
proportionate  increase  in  value.  Two  pieces  of  land  representing 
the  same  original  investment  at  the  same  time  may  vary  in- 
definitely in  value,  directly  and  relatively.  Again,  a  recent  title 
may  suddenly  become  enormously  valuable,  and  an  older  one  present 
a  loss. 

This  suggests  the  classification  of  land  with  reference  to  increased 
value,  rather  than  with  reference  to  date  of  title.  Such  a  classification 
would  doubtless  be  the  more  desirable,  were  it  possible;  but  the  neces- 
sity of  establishing  the  value  of  the  original  investment  would,  in  all 
likelihood,  place  it  beyond  the  realm  of  the  practicable;  there  is  ap- 
parently no  method  by  means  of  which  the  original  cost  of  land  could 
be  exactly  determined.  This  difficulty  may  be  partly  avoided  by  means 
of  classification  based  upon  existing  values,  rather  than  period  of  owner- 
ship. Such  a  classification  would  present  advantages,  for  through  it 
not  only  could  the  most  valuable   urban  sites  and  franchise  values 


2l8 


The  Transition 


Pt.  Ill 


be  brought  wdthin  the  fiscal  horizon,  but  these,  as  the  most  valuable, 
would  probably  present,  actually  if  not  relatively,  the  greatest  amount  of 
unearned  increment.  This,  however,  need  not  always  be  the  case; 
for  the  greatest  values  may  in  many  instances  represent  the  latest 
purchases.  And  here  occurs  the  thought  of  combining  the  two  methods 
of  classification  in  a  way  that  might  preserve  the  advantages  of  both, 
while  eliminating  a  portion  at  least  of  their  difficulties. 

This  method  of  classification  may  be  formulated.  If  one  series  of 
ten  classes  of  land  values  is  arranged  with  reference  to  periods  of  tenure, 
and  another  with  reference  to  values,  a  third  series  may  be  formed  by 
means  of  these  two  combined.  Thus,  if  the  first  series  is  numbered 
I — lo  in  respect  of  date,  and  the  second  series  i'  —  lo'  in  respect 
of  value,  the  basis  is  established  for  a  third  classification,  founded 
upon  the  other  two;  ranging  from  2"  —  to  20."  The  advantages 
of  this  third  classification  will  be  as  follows:  If  it  is  supposed  that  a 
certain  rental  value  falls  into  class  i  with  reference  to  title,  and  i'  with 
reference  to  value,  it  would  fall  into  class  2"  as  far  as  suitability  for 
absorption  is  concerned  —  that  is,  would  represent  simultaneously  the 
oldest  title  and  highest  value.  Land  falling  into  classes  10  and  10' 
in  relation  to  date  and  value,  would  be  in  class  20"  with  reference  to 
suitability  for  taxation;  that  is,  would  represent  the  latest  title  and 
lowest  values  and  would  be  correspondingly  free  from  fiscal  burdens. 
A  piece  of  land  representing  an  old  title  but  small  value  would  fall 
into  classes  i  and  10',  thus  be  included  in  class  11,''  and  occupy 
an  intermediate  position  between  the  most  and  least  suitable 
values.  As  the  greatest  unearned  increment  in  land  is  almost  in- 
variably found  where  the  longest  period  of  tenure  is  combined  with 
the  greatest  value;  this  method  of  classification  seems  to  present  the 
possibility  of  reaching  socially  created  wealth  in  the  form  of  land 
values  approximately  in  proportion  to  the  socially  created  wealth 
involved. 

Example:    The  land  of  any  area  may  be  arbitrarily  classified  as 
A,  B,  C,  D,  and  so  forth,  for  the  sake  of  identification,  thus: 

Land 


A 

B 

C 

D 

E 

F 

G 

'  H 

I          K 

refers  to  specific  properties  belonging  to  certain  owners. 


Bk.  II       The  Direct  Assessment  of  Land  Values 


219 


If  the  same  land  is  classified  with  reference  to  period  of  tenure,  the 
following  order  might  be  obtained: 

Classification  with  reference  to 
period  of  tenure. 


A 

B 

C 

D 

E 

F 

G 

H 

I 

K 

1 

10 

2 

6 

3 

9 

7 

4 

5 

8 

If  the  same  land  is  again  classified  with  reference   to  values,    the 
following  order  might  occur: 

Classification  with  reference  to 

values. 


A 

B 

C 

D 

E 

F 

G 

H 

I 

K 

1' 

8' 

3' 

9' 

10' 

2' 

6' 

4' 

5' 

7' 

In  combining  these  two  series  by  simple  addition  a  new  series  is 
obtained. 

Classification  with  reference  to  tenure 
and  value  combined. 


A 

B 

C 

D 

E 

F 

G 

H 

I 

K 

1 

10 

2 

6 

3 

9 

7 

4 

5 

8 

1' 

8' 

3' 

9' 

10' 

2' 

6' 

4' 

5' 

7' 

2" 

18" 

5" 

15" 

13" 

11" 

13" 

8" 

10" 

15" 

Ist 

8th 

2nd 

7th 

6th 

5th 

6th 

3rd 

4th 

7th 

The  series  2",  18",  5",  15",  and  so  on  would  serve  to  approximate 
the  relative  availability  of  the  values  considered ;  in  other  words  would 
serve  to  establish  the  relative  amount  of  socially  created  wealth  they 


220 


The  Transition  Pt.  Ill 


represent.  Land  A  would  be  the  first  available,  presenting  the 
oldest  title  and  greatest  value  combined;  Land  B  would  be  the 
least  suitable  and  consequently  exempt  as  long  as  desirable;  Land 
E  would  be  third  with  reference  to  title,  and  tenth  with  reference 
to  value,  but  together  with  land  G,  sixth  with  reference  to  these 
combined. 

There  are  many  methods  of  classifying  titles  with  simultaneous 
reference  to  age  and  value;  differentials,  coefficients,  and  logarithmic 
calculations  may  be  used.  It  may  be  useful,  under  certain  conditions, 
to  give  greater  or  less  relative  prominence  to  value  and  period  of  tenure; 
value,  for  instance,  being  of  greater  importance  in  new  neighbourhoods; 
period  of  tenure  in  long  established  areas.  Again,  in  certain  cases,  it 
might  be  advantageous  to  begin  with  varying  relative  percentages. 
Fifty  per  cent  or  more  might  be  the  first  assessment  upon  the  very 
highest  and  oldest  values,  other  percentages  decreasing  in  proportion 
to  values  involved.  Periods  of  assessment  could  be  varied;  they  could 
be  briefer  with  reference  to  the  highest  values  and  proportionately 
longer  as  values  decreased.  The  subject  is  capable  of  endless  modifica- 
tion in  application.  The  method  presented  is  but  the  simplest  illus- 
tration of  the  possibility  of  such  combined  classification.  A  method  of 
this  nature  suggests  a  means  of  reaching  socially  created  wealth  while 
inflicting  no  injury  upon  lately  acquired  property,  or  that  which  repre- 
sents no  unearned  values.  Local  conditions  would  doubtless  modify 
methods  of  simultaneous  classification,  yet,  as  a  general  principle,  it 
seems  that  a  progressive  system  of  assessment,  progressively  applied,  in 
order  of  value  and  period  of  possession  combined,  presents  a  means  of 
absorbing  social  wealth  which  need  inflict  no  actual  loss.  Where  society 
but  ceases  to  pour  its  wealth  at  the  feet  of  individuals,  no  cause  for  com- 
pensation occurs.  Again,  where  later  and  smaller  titles  are  carefully 
respected,  and  exempt  from  assessment  as  long  as  necessary  to  inflict 
no  loss,  it  is  obvious,  where  no  loss  is  occasioned,  that  no  cause  for  com- 
pensation exists. 

Classifications  of  this  nature  may  be  made  largely  independently 
of  the  testimonies  of  land-owners,  which  gives  them  advantage  over 
methods  involving  interested  statements.  Dates  of  titles  are  in  most 
cases  on  record,  and  land  values  may  be  approximated  by  methods  to 
be  discussed.  It  is  evident  that  these  classifications  would  be  of 
value  only  during  a  temporary  period  of  transition;  their  object  being 
but  to  exempt  small  and  recently  acquired  holdings  from  relatively 


Bk.  II       The  Direct  Assessment  of  Land  Values  22 1 

unjust  contribution.  This  transitory  period  passed,  all  land  would  fall 
under  the  same  influence. 

Students  of  Mr.  Herbert  Spencer's  earlier  works  are  familiar  with 
the  views  presented  in  Social  Statics  (i 851)  in  favour  of  the  policy  usually 
called  "Land  Nationalization" or  the  "resumption"  of  the  land  by  the 
commtmity.  Mr.  Spencer's  subsequent  studies  led  him  to  reject  these 
earlier  opinions  and  his  matured  conclusions  are  reviewed  in  Justice 
(1891).  Mr.  Spencer  there  presents  three  reasons  for  the  modification 
of  views  expressed  in  Social  Statics.  These  reasons  may  be  sum- 
marized as  follows:  (i)  The  fact  that  in  England  a  sum  equal  to 
£500,000,000  had  been  contributed  from  the  land  to  the  community 
during  the  past  three  centuries  in  the  form  of  poor  rates ;^  (2)  the 
question  of  compensation  seems  to  involve  such  difl&culty  and  in- 
justice that  the  resumption  of  the  land  by  the  community  would 
cause  more  loss  than  gain;^  (3)  the  "vices  of  officialism."  "When 
we  see,"  says  Mr.  Spencer,^  "that  alike  in  despotic  Russia,  in  con- 
stitutional Italy,  as  well  as  in  democratic  France  and  America, 
public  agents  of  all  grades,  from  ministers  down  to  police  officers, 
cannot  be  trusted  —  very  often  will  not  do  the  right  thing  without 
a  bribe,  and  will  perpetually  do  the  wrong  thing  when  a  bribe  is 
given  —  we  can  scarcely  expect  public  oversight  of  land-owners  to  be 
efficient." 

None  of  these  considerations  apply  to  a  direct  fiscal  system  as  here 
understood.    They  may  be  briefly  reviewed. 

I.  The  fact  that  a  certain  sum  had  been  contributed  in  charity  by 
the  land  to  the  community,  during  a  period  extending  over  three  hun- 
dred years  in  the  past,  has  slight  relation  to  the  advantages  or 
disadvantages  of  a  specific  fiscal  system  to  be  put  in  operation  in 
the  present  or  the  future.  Again,  as  poor-rates,  or  what  the  land 
has  contributed  to  the  community,  are  but  a  portion  of  taxation; 
and,  as  ground-rents,  or  what  the  community  contributes  to  the  land, 
must  apparently  always  have  been  greater  than  total  taxation,  it  seems 
to  follow  that  the  value  which  the  community  has  given  to  the  land, 
in  the  form  of  ground-rents,  must  be  in  excess  of  what  the  land  has 
given  to  the  community  in  the  form  of  poor-rates,  leaving  a  balance 
due  from  the  land  to  the  commimity. 


>  Justice,  i8gi,HerbertSpenctr  on  the  Land  Question,  p.  22. 
*  Ibid.,  p.  J7. 
'  Ibid.,  p.  2g. 


222 


The  Transition  Pt.  Ill 


II.  The  second  consideration,  with  reference  to  compensation  of 
expropriated  land-owners  does  not  seem  final  in  the  present  instance. 
No  land-owners  need  be  expropriated;  for  the  reversion  to  public 
ownership  and  control  of  land,  as  suggested  in  Mr.  Spencer's  earlier 
studies,  is  not  involved  with  the  policy  under  discussion.  The 
genuine  difficulties  with  reference  to  small  and  recent  holdings  might 
be  largely  eliminated  by  means  of  a  progressive  system  of  land 
value  classification  and  assessment  progressively  applied  to  socially 
created  wealth  alone,  with  the  proportionate  exemption  of  small  and 
recently  acquired  values.  If  this  can  be  done,  by  means  of  simul- 
taneous classification  of  value  and  period  of  tenure,  no  loss  is  in- 
flicted upon  individuals,  and,  consequently  no  cause  for  compen- 
sation created.  The  owners  of  the  oldest  and  most  valuable  site 
and  franchise  values  would  find  the  return  from  these  slowly  dim- 
inishing, through  a  period  of  years  as  long  as  necessary  to  cause 
no  financial  confusion;  while,  at  the  same  time,  revenue  from 
plants  and  improvements  would  be  increased  through  the  repeal  of 
burdens  upon  these. 

III.  It  may  be  said  that  Mr.  Spencer's  third  consideration  with 
reference  to  the  "vices  of  officialism"  does  not  apply  for  the  fol- 
lowing reasons:  A  single  direct  system  is  not  involved  with  "land 
nationalization,"  "resumption  by  the  community,"  "public  manage- 
ment," "public  control"  or  "public  ownership"  in  any  way  not 
recognized  at  present.  On  the  contrary,  if  anything  has  been  de- 
monstrated in  fiscal  history,  it  is  the  "vices  of  officialism,"  and  the 
freeing  of  society  from  these  may  be  regarded  as  among  the  most 
important  advantages  to  be  hoped  from  a  direct  policy.  Indirect 
taxation  is  the  fundamental  cause  of  the  "vices  of  officialism";  where 
the  cause  is  eliminated,  some  diminution  in  the  effect  might  be  ex- 
pected. 

It  is  unfortunate  that  Mr.  Spencer  did  not  turn  his  attention  to  a 
direct  system,  based  upon  social  wealth,  as  distinct  from  public  control 
or  management  of  land.  His  conclusions  are,  briefly  stated,^  as  follows: 
"While,  as  shown  in  Chapter  XI.,  I  adhere  to  the  inference  originally 
drawn,  that  the  aggregate  of  men  forming  the  community  are  the  su- 
preme owners  of  the  land  —  an  inference  harmonizing  with  legal  doctrine 
and  daily  acted  upon  in  legislation  —  a  fuller  consideration  of  the 
matter   has    led    me    to    the    conclusion    that  individual  ownership, 

*  Ibid.,  p.  23.    Cf.  Justice,  Appendix  B. 


Bk.  II       The  Direct  Assessment  of  Land  Values  223 

subject  to  State  suzerainty,  should  be  maintained."  He  refers  to 
the  subject  in  the  closing  chapter  of  his  Autobiography,^  in  the 
same  terms  concluding  that  "individual  ownership  under  State- 
suzerainty  ought  to  continue,"  These  finally  formulated  positions  of 
Mr.  Spencer  seem  in  no  way  out  of  harmony  with  the  fiscal  system 
here  considered. 

1  Vol.  II.,  p.  536. 


CHAPTER  in 


THE  REPEAL  OF  INDIRECT  TAXES 


Section   I  —  Tariff-Weapon   Taxes.     Section    II  —  Protective    Taxes. 
Section  III  —  Revenue  Taxes. 


Section  I —  Tariff- Weapon  Taxes 

THE  repeal  of  indirect  taxes  involves  important  difficulties. 
For  examination  with  reference  to  repeal  these  taxes  may 
be  classified  as  above. 

A  study  of  the  imposition  of  indirect  burdens,  upon  revenue 
and  protective  measures,  in  order  to  arm  a  nation  diplomatically, 
may  suggest  that,  in  abandoning  this  process,  a  nation  will  not  only 
lose  nothing,  but  gain  at  once  all  the  advantages  the  process  could 
create;  besides  avoiding  its  dangers  and  expense.  These  tariff- weapon 
taxes  were  imposed  for  no  purpose  other  than  exchange  for  foreign 
taxes.  If  the  exchange  can  be  effected,  the  taxes  should  be  repealed 
at  once.  If  not,  their  retention  is  without  purpose.  The  moment  they 
are  repealed,  in  exchange  for  other  taxes,  they  realize  the  sole  significance 
of  their  existence.  If  they  cannot  be  so  exchanged,  their  existence  has 
no  significance  and  they  cause  nothing  but  harm.  If,  therefore,  the 
statesmen  who  imposed  these  taxes  did  so  in  the  proper  way;  that  is, 
in  such  a  way  that  they  may  be  repealed  without  affecting  protective 
or  revenue  measures,  they  may  be  removed  at  any  time  with  safety. 

Section  II  —  Protective  Taxes 
Article  i  —  Exporting  Industries. 

A  widely  extended  system  of  protective  schedules  is  among  the  most 
serious  difficulties  in  the  modification  of  existing  fiscal  methods.  A 
progressive  system,  progressively  applied,  seems  to  be  the  least  disad- 
vantageous method  of  approaching  the  subject. 

Protective  taxes  may  be  divided  into  two  classes:  Taxes  benefiting 
exporting  industries,  and  taxes  supporting  industries  supplying  the 

224 


Bk.  II  The  Repeal  of  Indirect  Taxes  225 

home  market  alone.  There  is  reason  to  believe  that  the  majority 
of  exporting  industries  require  no  protective  taxation.  For  an  industry 
which  can  undersell  the  foreigner  in  his  own  market  to  demand  pro- 
tection at  home  seems  more  or  less  inconsistent,  economically  considered. 
Such  taxes  do  little  but  create  abnormal  prices  in  the  domestic  market, 
and  a  demand  for  more  taxes  abroad.  Viewed  in  the  light  of  economics, 
import  duties  afiecting  exporting  industries  could  in  many,  if  not  in 
the  majority  of  cases,  be  removed  with  little  effect  other  than  the  check- 
ing of  swollen  profits  and  prices. 

On  the  other  hand,  such  a  step  would  be  neither  wise  nor  desirable  on 
account  of  the  securities  involved.  Here  lies  the  most  important 
difficulty  with  reference  to  the  removal  of  indirect  taxation.  No 
step,  therefore,  which  would  suddenly  affect  these  values  could  be 
safely  entertained. 

This  suggests  the  careful  consideration,  as  far  as  possible,  of  every 
interest  affected,  and  a  gradual  reduction  of  protective  taxes  of  this 
kind,  continued  over  a  period  of  years  long  enough  to  occasion  no 
violent  fluctuations. 

Article  2  —  Domestic  Industries. 

The  second  class  of  protective  taxes  suggests  other  considerations. 
These  taxes  are  presumed  to  affect  industries  supplying  the  home 
market  alone.  The  industries  affected  by  taxes  of  this  nature  may 
or  may  not  depend  upon  the  taxes  for  their  existence.  If  not,  the 
same  considerations  are  met,  but  where  industries  are  actually  dependent 
upon  indirect  taxes  for  their  existence,  the  gradual  removal  of  the  taxes 
would  destroy  the  industries  and  throw  the  labour  out  of  employment 
at  once;  besides  checking  earning  powers  and  destroying  values.  Duties 
affecting  industries  of  this  kind  could  remain  intact  as  long  as  necessary 
to  insure  industrial  and  financial  security.  Ten  or  twenty  years  might 
be  ample  to  allow  for  a  readjustment  of  the  values  and  capital  concerned, 
and  would  avoid  any  sudden  displacement  of  labour. 

Again,  it  may  be  said  that  the  repeal  of  protective  restrictions  upon 
trade,  markets,  and  consumption  will  lower  prices  upon  many  forms 
of  raw  material ;  these  lowered  prices  rendering  certain  industries  possi- 
ble which  existing  high  prices  and  restrictions  place  beyond  the  reach 
of  the  people.  Capital  will  thus  flow  into  untaxed  and  unrestricted 
channels,  with  the  result  that  a  newer  and  broader  basis  for  the  demand 
for  labour  may  come  into  existence.    Values  now  checked  and  stifled 


226  The  Transition  Pt.  Ill 

by  taxes  upon  running  expenses  will  find  new  life,  and  many  securities, 
either  dormant  or  non-existent  to-day,  may  be  brought  into  active  being, 
thus  creating  compensating  considerations  with  reference  to  the  dangers 
of  eliminating  protective  duties  —  dangers,  however,  which  should  never 
be  neglected. 

Protection,  it  may  also  be  remembered,  may  be  continued  under  a 
direct  system  to  any  extent,  with  reference  to  any  industry  for  any 
length  of  time.  The  direct  subsidy  is  more  effective  and  less  expensive, 
as  a  protective  measure,  than  the  import  duty.  The  direct  subsidy 
could  always  be  used  where  required  to  avoid  complication. 

Section  III  —  Revenue  Taxes 

Taxes  of  this  nature  present  relatively  little  difficulty  in  their  removal, 
revenue,  excise,  and  octroi  duties  may  be  lifted  from  commodities  with 
comparatively  slight  danger.  Nevertheless,  important  financial  inter- 
ests may  be  involved  with  the  action  of  these  taxes,  and  no  sudden 
effects  should  be  caused.  The  gradual  and  progressive  principle  again 
occurs.  Revenue  taxes  might  be  classified  with  reference  to  the  amount 
produced  and  their  relative  importance  in  the  industrial  and  financial 
life  of  the  society.  By  means  of  these  classifications,  taxes  could  be 
gradually  removed  in  such  a  way  that  the  smallest  values  and  those 
least  interfering  with  industrial  life  would  be  first  repealed,  others 
remaining  in  abeyance  as  long  as  conditions  required. 

Direct  taxes  on  all  forms  of  personal  property,  houses,  improvements, 
incomes,  plants,  rolling  stock,  mortgages,  and  credits  would  offer  no 
difficulty;  the  contributors  being  relieved  of  an  unnecessary  burden 
with  no  disadvantageous  results. 

In  any  radical  change  of  existing  systems,  the  period  of  transition 
is  the  most  critical  consideration.  This  period  of  readjustment  would 
require  great  care;  for  artificial  y  created  and  supported  values  would 
be  found  on  every  hand  demanding  conservation  if  disaster  is  to  be 
avoided.  In  general,  it  may  be  said  that  a  progressive  system,  pro- 
gressively applied,  and  especially  designed  for  the  purpose  of  protecting 
all  values,  and  avoiding  sudden  and  violent  fluctuations,  would  be  the 
only  way  in  which  conditions  of  this  kind  could  be  met. 


CHAPTER  IV 

THE  ESTABLISHMENT  OF  LAND  VALUES 

TWO  sites  adjoin  in  a  metropolitan  centre;  one  vacant,  the 
other  occupied  by  a  remunerative  building  investment. 
Should  these  two  sites  be  estimated  and  assessed  at  the  same 
value,  one  yielding  a  large  return  to  the  owner,  the  other 
nothing?  Again,  perhaps  one  of  the  sites  is  occupied  by  a  new  and 
valuable  building,  the  other  by  an  older,  smaller,  but  still  paying  im- 
provement; should  the  less  productive  site  contribute  on  the  same  basis 
as  the  more  productive?  Can,  or  should,  in  this  way,  a  more  or  less 
hypothetical  value  be  placed  upon  land  irrespective  of  actual  returns? 
Analogous  questions  arise  with  reference  to  agricultural  land.  Is  it 
possible,  in  workable  form,  to  divorce  those  values  represented  by  the 
cultivation  of  generations,  and  improvements  due  to  drainage,  grading, 
hedging,  planting,  fencing  and  so  on,  from  the  value  of  the  mere  sur- 
face of  the  soil?  How  may  the  two  kinds  of  value  be  distinguished 
which  together  form  the  total  value  of  a  water  works:  one  represented 
by  its  pipes,  plant,  power,  and  machinery,  and  the  other  by  the  area 
occupied  in  its  distributive  fimctions?  What  is  the  value  of  that  portion 
of  the  street  of  a  city  used  by  a  tramway  or  omnibus  corporation? 
How  much  is  the  tunnel  worth,  constructed  by  an  underground  trans- 
portation company?  Telephone  or  cable  companies  use  relatively 
little  of  the  surface  of  the  earth;  their  wires  or  cables  may  be  stretched 
overhead,  under  the  ground,  or  under  the  sea;  at  what  amount,  however, 
should  be  valued  the  land  which  they  do  use?  How  much  is  the  long 
strip  of  desert  worth,  unable  perhaps  to  support  a  blade  of  grass,  yet 
which  supports  the  daily  traffic  of  a  great  transcontinental  railway 
system?  At  what  amount  may  be  estimated  that  small  portion  of  the 
earth  in  a  wilderness,  occupied  by  the  shaft  of  a  mine?  Questions 
such  as  these  demand  definite  answers  if  land  values,  representing  social 
wealth,  are  ever  to  take  their  natural  place  in  fiscal  and  industrial  life. 
The  words  of  Lord  Farrar^  present  some  of  these  difficulties.     He 

^Memoranda  Presented  to  The  Royal  Commission  on  Local  Taxation,  p.  82,  quoted  by  Professor  Sm&rt. 
Taxation  of  Land  Values,  and  the  Single  Tax,  p.  75. 

227 


228  The  Transition  Pt.  Ill 

says,  speaking  of  site  rating:  "I  doubt  whether  any  such  scheme  is 
practicable.  In  the  first  place  the  land  and  the  house  have  not,  for 
purposes  of  valuation,  any  separate  existence.  Valuers,  no  doubt, 
say  they  can  value  them  separately,  and  Mr.  Chaplin's  Agricultural 
Rating  Act  may  be  quoted  as  a  precedent,  if,  indeed  that  unfortunate 
Act  can  be  quoted  as  a  precedent  for  anything.  Valuers  will,  no  doubt, 
put  a  valuation  on  anything,  whether  they  know  anything  about  it 
or  not,  but  the  question  is  what  real  basis  have  they  for  their  valuation. 
The  only  ultimate  basis  of  a  valuer's  knowledge  is  his  experience  of 
actual  market  values;  and  as  the  land  and  the  houses  upon  it  are  sold 
and  let  together,  no  such  basis  can  exist  for  a  separate  value  of  the  two 
things.  A  valuer's  judgment  is  limited  by  his  experience  and  where 
there  is  no  experience  his  judgment  is  untrustworthy." 

Perhaps  the  most  interesting  body  of  material  with  reference  to 
the  practical  application  of  direct  rating  of  land  values  is  found  in  the 
Final  Report  of  the  Royal  Commission  on  Local  Taxation.  The  Members 
of  the  Commission  are  men  accustomed  to  the  administration  of  practi- 
cal affairs;  men  whose  names  are  synonymous  with  ability  and  integrity. 
The  subject  is  examined  with  thoroughness,  numerous  witnesses 
develop  almost  every  side  of  the  question,  and  apparently  exhaust 
the  most  authoritative  sources  of  information.  The  majority  of  the 
Commission  not  only  reported  against  the  measure,  but  against  the 
mild  form  suggested  with  reference  to  local  taxation  alone.  The  Min- 
ority Report  concludes  1  that  the  rating  of  site  values,  if  adopted  under 
certain  very  conservative  conditions,  ''would  show  that  there  is  no 
large  undeveloped  source  of  taxation  available  for  local  purpose,  and 
still  less  for  national  purposes." 

A  few  citations  from  the  Commission's^  Final  Report  follow:  "Mr. 
Vigers,  President  of  the  Surveyor's  Institution,  stated  that  sites  and 
structures  could  be  valued  separately  if  the  buildings  were  suitably 
situated,  but  he  pointed  out  the  difficulty  where  this  is  not  the  case, 
and  thought  that  such  a  system  was  not  advisable  on  the  ground  that 
it  would  involve  a  double  valuation  and  lead  to  expense  and  friction. 

"Mr.  H.  A.  Hunt  thought  that  it  would  be  very  difficult  to  value 
sites  and  structures  separately,  and  very  expensive.  He  stated  that 
in  making  valuations  at  the  present  time,  he  never  divided  site  from 
structure. 


»  Final  Report  of  Commission  on  Local  Taxation,  p.  176. 
'  Ibid.,  pp.  41,  42. 


Bk.  II  The  Establishment  of  Land  Values  229 

"Mr.  Rickman  pointed  out  that  each  site  would  have  to  be  valued 
separately,  and  that  it  would  be  very  difficult  to  deal  with  the  case  of 
restrictive  covenants  and  rights  of  adjoining  owners,  which  vary  very 
much. 

"Mr.  Sabin  .  .  .  pointed  out  that  difficulties  would  arise  where 
the  ground -rent  of  a  leasehold  was  relatively  large,  and  represented  a 
first  charge  on  the  building,  and  not  merely  the  value  of  the  bare  land. 
In  such  a  case  the  freeholder,  if  he  were  the  party  in  receipt  of  the  full 
ground-rent,  would  desire  not  to  be  assessed  on  the  whole  annual  sum 
reserved  under  the  lease,  while  the  lessee  would  hold  that  the  whole 
was  site  value.  Such  disputes  would  be  reduced  in  proportion  to  the 
closeness  of  the  definition  adopted.  Other  difficulties  would  arise 
which  definition  would  not  so  readily  avoid;  as,  where  the  capabilities 
of  the  site  were  not  easily  determinable;  where  the  concurrence  of 
two  or  more  freeholders  might  be  necessary  to  secure  the  best  use;  and 
where  rights  of  adjoining  properties  to  light  and  air  might  be  undeter- 
minable quantities. 

"Mr.  Mathews,  land  agent  and  surveyor,  of  Birmingham,  thought 
that  though  it  was  possible  to  put  a  separate  value  on  site  and  structure, 
it  was  not  practicable,  as  it  would  involve  an  inquiry  into  the  most 
productive  use  the  land  could  be  put  to.  He  also  thought  that  the 
proposed  system  would  give  rise  to  endless  litigation." 

Other  difficulties  are  presented  when  the  varying  nature  of  site  values 
is  understood.  Mr.  Fox,^  Secretary  of  the  Commission,  asks  the  fol- 
lowing question:  "A,  the  ground-landlord,  lets  a  site  for  £10  a  year 
to  B,  the  builder.  B  spends  £1,000  in  building,  and  lets  the  house  for 
£70  to  C.  B  thus  receives  £60  net,  or  6  per  cent  on  his  outlay,  which 
we  may  assume  to  be  the  ordinary  rate  of  builders'  profits. 

"The  neighbourhood  improves,  and  after  a  while  C  lets  the  house 
for  £100  a  year  to  D.     C  thus  receives  £30  net. 

"The  ratable  value  of  the  house  is  now  £100,  and  the  site  value  is  £40. 

"Who  is  the  owner  or  recipient  of  that  site  value? 

"A,  the  ground-landlord,  clearly  has  £10  of  it,  and  no  more.  But 
who  has  the  remaining  £30?  " 

Before  entering  into  a  more  or  less  detailed  examination  of  the  sub- 
ject, Adam  Smith  may  be  consulted.  He  says,^  after  observing  that 
"nothing  could  be  more  reasonable  than  that  a  fund  which  owes  its 

>  Tlie  Rating  of  Land  Values,  p.  39. 
i  }  The  Wealth  of  Nations.     Bk.  V.,  ch.  ii.,  p.  438. 


230 


The  Transition  Pt.  Ill 


existence  to  the  good  government  of  the  State  should  be  taxed  pecul- 
iarly." "Though,  in  many  different  countries  of  Europe,  taxes  have 
been  imposed  upon  the  rent  of  houses,  I  do  not  know  of  any  in  which 
ground  rents  have  been  considered  as  a  separate  subject  of  taxation. 
The  contrivers  of  taxes  have,  probably,  found  some  difficulty  in  ascer- 
taining what  part  of  the  rent  ought  to  be  considered  as  groimd  rent, 
and  what  part  ought  to  be  considered  as  building  rent.  It  should 
not,  however,  seem  very  difficult  to  distinguish  those  two  parts  of 
the  rent  from  one  another." 

This  distinction  may  be  approximated  in  the  following  way. 
Commercial  and  industrial  properties  are  first  considered:  railways, 
water,  and  gas  companies,  office  buildings,  and  so  forth.  If,  from  the 
total  earnings  of  the  property,  that  is,  of  land  and  improvement  together, 
are  deducted  all  taxes,  repairs,  and  operating  expenses,  together  with 
an  ample  allowance  on  capital  invested  in  improvements,  there  will 
be  a  remainder  which  represents  no  form  of  fixed  charge  with  reference 
to  improvements ;  it  will,  therefore,  apparently  represent  the  net  annual 
value  of  the  land  alone.  It  seems,  moreover,  that  this  method  may 
be  applied  to  all  forms  of  commercial,  franchise,  and  mineral  values. 
It  may  be  used  to  estimate  the  value  of  the  land  privileges  of  a  cable, 
or  a  wireless  telegraph,  company;  of  the  value  of  the  rights  to  the  use 
of  the  streets  of  an  omnibus  corporation  or  the  mineral  privileges  of  a 
mining  enterprise.  The  capital  value  of  a  franchise  may  be  reached  by 
deducting  from  the  market  value  of  all  securities  issued  against  it,  the 
total  value  of  all  tangible  property  owned  by  the  corporation;  the 
average  rate  of  money  will  then  approximate  the  annual  value  con- 
sidered. 

All  land  values,  under  a  direct  fiscal  system,  would  be  registered. 
The  mere  fact  of  registration  would  in  the  course  of  time,  act  as  a  final 
method  of  establishing  values  of  all  kinds  from  the  franchise  of  a  great 
railway  to  the  site  of  a  house.  With  reference  to  idle  or  partly  developed 
property,  it  may  be  said  that  within  certain  limitations,  the  use  a  man 
may  choose  to  make  of  his  land  is  of  no  concern  to  the  community.  Its 
value,  however,  is  of  interest,  as  having  been  created  by  the  community 
and  belonging  apparently  to  it.  Ground-rents,  therefore,  if  ever  applied 
to  social  needs,  should  be  based  upon  the  most  productive  use  to  which 
land  may  be  put.  Where  this  is  done,  irrespective  of  actual  use,  the 
society  either  insures  the  most  productive  occupation  of  the  land, 
or  involves  its  members  with  no  loss  through  the  action  of  individuals, 


Bk.  II  The  Establishment  of  Land  Values  231 

The  conclusions  of  the  majority  of  the  Royal  Commission  were 
opposed  to  the  separate  rating  of  land  values  "on  account  of  the  diffi- 
culty, and  uncertainty  of  the  proposed  system  of  valuation."  These  con- 
clusions were,  however,  not  held  by  all  the  members  of  the  Commission. 

A  Minority  Report^  says:  "On  the  whole  we  are  disposed  to  think 
that  a  valuation  of  sites,  sufficiently  accurate  for  the  purpose  and  not 
inferior  to  the  present  valuation  of  hereditaments,  could  be  made 
without  undue  labour  and  expense.  The  evidence  afforded  by  sales 
and  leases  of  sites  constitutes,  we  believe,  an  adequate  basis  for  an 
expert's  judgment,  and  the  valuation  so  made  can  in  most  cases  be 
checked  by  deducting  the  value  of  the  structure  (i  e.,  a  percentage  on 
the  normal  cost  of  reproduction)  from  the  rack-rent  of  the  whole 
property.  Such  a  valuation  could  obviously  be  made  only  by  a  pro- 
fessional expert,  though  the  data  and  inferences  on  which  it  is  based  can 
be  understood  and  criticized  by  any  one  possessed  of  common  sense 
and  local  knowledge." 

The  following  is  taken  from  the  individual  report  of  His  Honour, 
Judge  O'Connor,  K.  C.^:  "Many  witnesses  who  appeared  before  the 
Commission,  dwelt  with  emphasis  upon  the  alleged  or  suggested  dif- 
ficulty of  estimating  the  value  of  the  land  apart  from  buildings  upon 
it ;  but  no  one  of  the  expert  witnesses  would  say  that  it  was  impossible, 
and  none  would  admit  that  he  could  not  himself  do  it  if  was  necessary. 
But,  in  fact,  the  matter  is  passed  the  stage  of  mere  argument,  for  not 
only  is  the  thing  being  done  every  day  for  private  purpose,  but  it  is 
also  done  on  public  account  in  all  three  countries  under  the  established 
practice.  The  entire  system  of  valuation  in  Ireland  under  Acts  of  Par- 
liament is  based  upon  the  separate  valuation  of  land  and  buildings. 
In  England,  land  has  to  be  separately  valued  in  the  country  for  the 
purpose  of  the  Agricultural  Rates  Act,  which  prescribes  the  procedure 
for  ascertaining,  and  the  Returns  which  are  to  show,  the  division  between 
the  ratable  value  of  agricultural  land  and  that  of  the  buildings  and 
other  hereditaments.  .  .  .  When  the  matter  is  considered  quietly, 
apart  from  personal  interest  or  the  prejudice  of  class  or  profession, 
it  will  be  easily  seen  that  there  is  no  real  difficulty  about  it,  and  that  it 
would  be  just  as  practicable  to  make  a  map  of  the  whole  country,  show- 
ing the  valuation  per  acre  or  rood  or  plot  of  the  surface  of  the  land, 
as  it  is  to  make  an  Ordnance  Survey  Map,  showing  the  elevation  above 

'  Royal  Commission  on  Local  Taxation,  Report  of  the  Minority,  p.  i6g. 
»  Ibid,  p.  182. 


232  The  Transition  Pt.  Ill 

the  sea  of  every  part  of  the  country.  In  both  there  would  be  plains  and 
slopes  and  peaks,  though  the  summits  of  the  physical  contours,  would 
often  be  the  depression  of  the  valuation  contours,  and  vice  versa." 

The  case  cited  by  Mr.  Fox  may  be  considered  as  typical  of  a  com- 
bination of  interests  in  ground-rents.  A  lets  a  site  for  £10  a  year  to 
B,  who  spends  £1000  and  lets  the  whole  property  for  £70  to  C,  who 
sublets  for  £100,  although  the  owner  received  but  £10.  How  many 
these  different  interests  contribute  proportionately? 

This  cannot  be  done  without  relative  classification.  A  represents 
the  oldest  title,  but  receives  only  one  fourth  the  value  of  the  land. 
C  is  in  receipt  of  the  bulk  of  the  unearned  increase,  and  his  interest 
should  be  classed  proportionately  higher  than  that  of  A,  as  a  contribu- 
tary  source.  B  receives  but  the  normal  return  on  his  improvements 
and  should  contribute  nothing. 

An  extreme  case  may  be  presented:  A  invests  in  umimproved  land, 
and  lets  to  B  for  £10.  B  makes  no  improvements,  but,  a  railway  ter- 
minal being  projected  close  by,  sublets  to  C  for  £100.  C  spends  £1000 
and  sublets  at  once  to  D  for  £200. 

In  this  case,  at  6  per  cent  return  on  improvements,  the  land  is 
worth  £140,  of  which  A  receives  but  £10,  B  £90,  and  C  £40,  respect- 
ively. B,  who  has  invested  nothing,  but  who  has  the  larger  interest, 
should  be  the  first  contributor,  C,  following  in  the  relation  of  40  to  90, 
and  A  as  10  to  these. 

It  may  seem  in  this  case  that  A's  capital  invested  in  land  is  placed  at 
a  disadvantage  with  C's  capital  invested  in  improvements.  If  A's 
investment  is  among  the  smaller  holdings  and  presents  no  unearned 
increase,  by  means  of  classification  in  relation  to  these,  it  should  be 
exempt  from  contribution  long  enough  to  inflict  no  loss. 

Such  considerations  would  apparently  apply  to  interests  in  land 
represented  by  mortgages.  These  interests  should  be  classified  in  rela- 
tion to  values  and  contribute  proportionately.  The  bulk  of  such  in- 
terests would  probably  be  represented  by  institutions  of  trust  and 
would  have  to  be  treated  with  the  greatest  care.  The  land-owner 
receiving  no  return  from  mortgaged  property,  would  contribute  nothing. 

It  may  be  said  in  general,  if  ever  the  direct  assessment  of  socially 
created  wealth  is  attempted  by  a  society,  that  distinctions  in  interest  in 
the  same  land  would  probably  disappear  and  the  land  be  owned  and 
used  by  the  same  person;  the  man  able  and  willing  to  pay  the  most 
for  it.    On  the  other  hand,  during  anv  period  of  readiustment  these 


Bk.  II  The  Establishment  of  Land  Values  233 

intermediate  interests  should  be  carefully  considered  and  a  system  of 
proportionate  classification,  proportionately  applied,  seems  the  most 
effective  way  in  which  this  could  be  done. 

Another  difficulty  would  arise  with  reference  to  unproductive  im- 
provements. Land  might  increase  in  value  while  improvements 
deteriorated.  Should  an  unproductive  owner  receive  compensation 
for  worthless  improvements?  Such  questions  are  probably  best  de- 
cided through  the  study  of  specific  cases  by  means  analogous  to  those 
in  use. 

It  seems  scarcely  worth  while  to  multiply  difl&culties  and  counter 
considerations  of  this  nature;  the  process  may  be  continued  indefinitely. 
No  radical  modification  of  existing  fiscal  methods  such  as  the  liberation 
of  industry  and  the  use  of  social  wealth  for  social  needs,  could  be  adopted 
without  meeting  an  endless  array  of  important  practical  complications. 
A  glance  at  prevalent  slums,  pauperism,  commercialized  vice,  pluto- 
cratic exploitation,  strikes,  labour  troubles,  unemployment  and  the 
tide  of  Socialism  gathering  round  these  suggests,  however,  that 
the  existing  system  is  not  devoid  of  practical  difficulties  of  its  own.  These 
difficulties,  therefore,  on  both  sides,  should  be  fully  stated  and  estimated 
in  relation  to  each  other,  and  the  most  rational  conclusions  adopted. 

Under  a  direct  fiscal  system,  based  upon  ground-rents  as  here  under- 
stood, land  would  be  regarded  as  private  property.  Titles  to  the  land 
should  be  registered  publicly,  at  whatever  value  the  owner  estimated 
them,  without  interference  on  the  part  of  the  administration.  This 
annual  unimproved  value  would  be  a  matter  of  public  knowledge  and 
any  one  could  offer  a  higher  contribution  for  the  use  of  the  land,  if  he 
regarded  it  as  worth  more  than  it  was  paying.  If  the  land-owner  in 
possession  were  unable  or  unwilling  to  pay  the  real  value  of  his  land, 
he  would  be  superseded  after  sufficient  notice  by  a  more  productive 
owner,  the  first  landlord  receiving  from  the  second  full  compensation 
for  all  capital  invested  in  productive  improvement.  Owners  in  pos- 
session might  by  this  means  be  protected  from  loss  on  one  side  and  from 
ignorant  over-estimation  on  another. 

With  some  such  method  as  this,  modified  to  suit  specific  conditions, 
such  as  mineral  privileges,  franchises  and  so  forth,  the  mere  public 
registration  of  titles  to  the  use  of  land  would  establish  their  value 
automatically.  Where  the  value  of  titles  to  the  ownership  of  specific 
portions  of  the  land  is  a  matter  of  public  knowledge,  these  values  will 
largely  regulate  themselves,  both  actually  and  relatively,  through  pub- 


234 


The  Transition  Pt.  Ill 


licity.  By  this  means  productive  land-owners  would  be  able  to  fix 
the  value  of  their  land  themselves  and  would  pay  what  they  considered 
it  worth.  Under  such  a  system,  the  land  might  find  its  most  productive 
use  in  the  hands  of  men  whose  interest  it  was  to  make  the  most  of  it; 
and,  as  the  Duke  of  Argyll^  well  says,  "the  land  of  a  country  is  never  so 
well  'nationalized'  as  when  it  is  committed  to  the  ownership  of  men 
whose  interest  it  is  to  make  the  most  of  it." 


^TheProphet'fiJSan  Francisco,  The  Nineteenth  Century,  April,  1884,  p.  S44. 


CHAPTER  V 

THE  DIFFUSION  OF  A  TAX  ON  LAND  VALUES 

A  TAX  on  nearly  all  forms  of  consumption  is  either  bodily 
transferred  to  the  consumer  or  diffused  through  intermediate 
channels.     Would  a  tax  contributed  by  the  owner  of  ground- 
rents   be   recovered   by  increasing    rents   proportionately? 
If  this  can  be  done,  the  incidence  of  such  a  tax  will  be  diffused  through- 
out the  society  in  prices,  and  borne  by  the  consumer  of  the  produce  of 
the  land  in  the  form  of  food,  buildings  and  transportation. 

The  majority  of  economic  writers  believe  that  a  tax  on  ground-rents 
cannot  be  recovered  by  the  owner  of  the  land.  Their  reasons  are: 
Value  depends  upon  supply  and  demand.  A  tax  on  a  commodity 
may  be  used  to  affect  the  supply.  By  checking  supply,  price  may  be 
raised  and  a  tax  recovered.  The  supply  of  land  cannot  be  affected  by 
taxation,  and  the  demand  is  often  independent  of  fiscal  influences, 
based  upon  density  of  population,  transportation,  facilities,  mineral 
deposits  and  so  forth.  "A  tax  upon  ground  rents  would  not  raise 
the  rent  of  houses,"  says  Smith.^  "It  would  fall  altogether  upon  the 
owner  of  the  ground  rent."  "A  tax  on  rent  falls  wholly  on  the  landlord," 
says  Mill. 2  "  There  are  no  means  by  which  he  can  shift  the  burden  upon 
any  one  else.  It  does  not  affect  the  value  or  price  of  agricultural  prod- 
uce, for  this  is  determined  by  the  cost  of  production  in  the  most  un- 
favourable circumstances,  and  in  those  circumstances,  as  we  have  so 
often  demonstrated,  no  rent  is  paid."  Mill  here  suggests  the  Ri- 
cardian  theory  of  rent,  which  is  in  harmony  with  this  opinion.  "Corn 
is  not  high  because  a  rent  is  paid,"  says  Ricardo,'  "but  a  rent  is  paid 
because  corn  is  high."  And  again,^  "If  the  high  price  of  corn  were  the 
effect,  and  not  the  cause  of  rent,  price  would  be  proportionately  in- 
fluenced as  rents  were  high  or  low,  and  rent  would  be  a  component 
part  of  price.    But  that  corn  which  is  produced  by  the  greatest  quantity 


*  Wealth  of  Nations.     Bk.  V.,  ch.  ii.,  p.  436. 

'  Principles  0/  Political  Economy.     Bk.  V.,  ch.  iii.,  §2,  p.  496. 

*  Principles  of  Political  Economy,  p.  60. 

*  Ibid.,  p.  62. 

235 


236  The  Transition  Pt.  Ill 

of  labour  is  the  regulator  of  the  price  of  corn;  and  rent  does  not  and 
cannot  enter  in  the  least  degree  as  a  component  part  of  its  price." 

The  natural  conclusion  is  that  the  incidence  of  a  tax  on  ground-rents 
falls  upon  the  owner  of  the  rent  and  cannot  be  transferred.  This 
view,  however,  is  not  held  by  all  inquirers.  A  well  sustained  opinion, 
from  an  opposed  point  of  view,  is  found  in  the  works  of  Mr.  D.  A.  Wells  i^ 
*Ts  it  possible  to  believe  that  in  a  city  like  New  York,  where  less  than 
four  per  cent  of  its  population  pay  any  direct  tax  on  real  estate,  or  in  a 
city  Uke  Montreal,  where  the  expenses  of  the  city  are  mainly  derived 
from  taxes  on  land  and  the  building  occupancy  of  land,  the  great  ma- 
jority of  the  inhabitants  of  those  cities  are  exempt  from  all  land  tax- 
ation? In  China,  where,  as  before  shown,  the  title  or  ownership  of  all 
land  vests  in  the  emperor,  and  the  revenue  of  the  Government  is  almost 
exclusively  derived  from  taxation  of  land  in  the  form  of  rent,  does  the 
burden  of  the  tax  remain  upon  the  owner  of  the  land?  If  the  tax  in  the 
form  of  rent  is  paid  in  the  products  of  the  land,  as  undoubtedly  it  is 
in  part,  will  not  the  cost  of  the  percentage  of  the  whole  product  of 
the  land  that  is  thus  taken  increase  to  the  renter  the  cost  of  the  per- 
entage  that  is  left  to  him ;  or,  if  the  product  is  sold  for  money  with  which 
to  pay  the  tax  rent,  will  not  its  selling  price  embody  the  cost  of  the 
tax,  as  it  will  the  cost  of  every  other  thing  necessary  for  production? 
To  affirm  to  the  contrary  is  to  say  that  the  price  which  the  Chinese 
farmer  pays  for  the  right  of  the  exclusive  use  of  his  land  is  no  part  of 
the  crops  he  may  raise  upon  it. 

"Consider  next  the  assertion  of  those  who  maintain  the  non-diffusion 
theory  that  taxes  on  land  are  paid  by  the  owners  because  the  supply  of 
land  can  neither  be  increased  nor  diminished.  In  answer  to  it  we 
have  the  indisputable  fact  that  the  owners  of  land,  whenever  taxes 
are  increased,  attempt  to  obtain  an  increased  rental  for  it  if  the  circum- 
stances will  permit  it.  And  the  very  attempt  tends  to  increase  the 
rent.  Nothing  but  adverse  circumstances,  such  as  diminishing  popu- 
lation or  commercial  and  industrial  distress,  can  prevent  a  rise  in  the 
rental  of  land  on  which  the  taxes  are  increased;  and  in  the  case  of  dwell- 
ings and  warehouses  the  rise  is  almost  always  very  prompt,  because 
no  man  will  erect  new  buildings  or  warehouses  unless  their  rent  com- 
pensate fully  the  increase  of  taxation.  And  in  any  prosperous  com- 
munity, in  which  population  increases  in  the  natural  ratio,  there  must 
be  a  constant  increase  of  dwellings  and  warehouses  to  prevent  a  rise 

^, Theory  and  Practice  of  Taxation,  p.  594. 


Bk.  II      The  Diffusion  of  a  Tax  on  Land  Values  237 

of  rent,  independent  of  higher  wages  and  higher  taxation.  In  no  other 
occupation  is  capital  surer  of  obtaining  the  average  net  remuneration 
than  in  the  erection  of  dwellings  and  warehouses,  and  nothing  but 
lack  of  general  prosperity  and  diminishing  population  can  throw  the 
burden  of  taxation  on  real  estate  or  its  owners,  without  the  slightest 
attempt  at  combination  on  their  part.  If  the  owners  of  land  are  not 
reimbursed  for  its  taxation  by  its  occupants,  new  houses  'would  not  be 
erected,  the  old  ones  would  wear  out,  and  after  a  time  the  supply  would 
be  so  small  that  the  demand  would  raise  rents,  and  house  building  begin 
again,  the  tax  having  been  transferred  to  the  occupier.' 

"It  is  pertinent  at  this  point  to  notice  the  averment  that  is  frequently 
made,  that  cidtivators  of  the  soil  cannot  incorporate  taxes  on  the  land 
in  the  price  of  their  products,  because  the  price  of  their  whole  crop 
is  fixed  by  the  price  at  which  any  portion  of  it  can  be  sold  in  foreign 
markets.  In  answer  to  this  we  have  first  the  fact  that,  to  give  the 
population  of  the  world  an  adequate  supply  of  food  and  other  agri- 
cultural products,  it  is  not  only  necessary  that  all  the  land  at  present 
under  cultivation  shall  continue  to  be  so  employed,  but  further  that 
new  lands  shall  each  year  be  brought  under  cultivation,  or  else  the  land 
already  cultivated  shall  be  made  more  productive." 

Neither  of  these  diametrically  opposed  positions  is  easily  answered. 
This  suggests  a  different  method  of  inquiry. 

There  are  apparently  but  four  possible  suppositions  with  reference 
to  the  recovery  or  non-recovery  of  a  tax  upon  unimproved  land  values: 
(i)  The  tax  may  be  entirely  recovered  by  the  owner  of  the  ground- 
rent;  (2)  it  may  be  partly  recovered;  (3)  it  cannot  be  recovered 
at  all;     (4)    in  some  cases  it  may  be  recovered,  in  others  not. 

I.  Land  values  depend  fundamentally  upon  the  profit  to  be  derived 
from  the  use  of  the  land;  profits  upon  the  general  return  to  productive 
employment,  or  wages.  If  a  tax  upon  unimproved  land  is  everywhere 
recoverable  by  the  land-owner,  profits  must  swell  proportionately,  or 
the  tenant  would  not  pay  the  increased  rent.  But  profits  could  not 
be  maintained  without  a  relative  movement  in  the  general  absorbing 
capacity  of  the  population,  or  a  compensating  rise  in  wages.  Thus, 
upon  the  supposition  of  the  full  recovery  of  the  land-tax,  a  society  will 
diffuse  the  burden  throughout  all  its  members;  the  land-owning  class 
excepted  in  part,  for  it  would  contribute  a  certain  share  through  con- 
sumption, and  act  as  gatherers  of  the  revenue.  From  an  economic 
point  of  view,  a  society  under  such  a  system  might  gain  the  following 


238  The  Transition  Pt.  Ill 

advantages:  (i)  The  sum  annually  extracted  from  the  earnings  of 
the  people  through  prices  forced  by  protective  taxation.  (2)  The 
burdens  imposed  upon  their  earnings  through  higher  prices,  caused  by 
revenue  taxation  which  never  find  their  way  into  the  national  treasury. 
(3)  Fiscal  accumulations  imposed  upon  their  industry  and  commerce 
for  diplomatic  purposes;  (4)  Those  annual  losses  represented  by  the 
stifling  of  normal  trade  and  industry  through  indirect  burdens  on  con- 
sumption; (5)  The  millions  absorbed  from  earnings,  traceable  to 
party  contribution,  waste,  administration  extravagance  and  corruption 
owing  to  the  control  of  taxes  levied  upon  the  necessaries  of  life.  Upon 
the  supposition,  then,  that  assessments  upon  land  values  are  recoverable, 
a  direct  system  might  create  great  advantages  for  a  society  as  a  whole; 
land-owners,  being  unaffected,  rent  increasing  with  the  tax. 

II.  If  the  owners  of  ground-rents  can  recover  but  a  portion  of  the 
tax,  the  society  as  a  whole  seems  to  gain  the  foregoing  advantages, 
together  with  that  portion  of  the  wealth  it  annually  creates,  not  recov- 
ered through  increased  rents. 

III.  If  none  of  the  tax  could  be  recovered,  the  people  at  large  ap- 
parently gain  the  foregoing  increase  to  their  revenues,  together  with 
that  portion  of  existing  taxation  not  falling  upon  ground-rents,  to-day. 

IV.  If,  in  certain  cases,  the  tax  could  be  recovered  and  in  others  not, 
or  in  any  combination  of  the  two,  the  gains  to  the  society  seem  to  be 
proportionate;  for  in  no  instance  would  the  tenant  pay  more  than  the 
land  was  worth  and  the  land  is  worth  whatever  value  the  society  as  a 
whole  attaches  to  it  taxed  or  untaxed. 


Book  III 
INCIDENCE  OF  TAXATION:  INDIRECT,  DIRECT 

CHAPTER  I 

INCIDENCE    OF   INDIRECT   TAXATION   IN   THE   UNITED   STATES 

TO  SOME  observers  a  single  fiscal  system,  based  upon  the 
value  of  the  land,  involves  a  disproportionate  burden  upon 
agricultural  interests.  Contribution  from  farms  and  small 
holdings,  at  the  same  rate  as  from  valuable  city  sites  and  cor- 
porate land  privileges,  seems  to  place  an  unequal  burden  upon  the 
former.  Again,  it  seems  that  the  exemption  of  improvements  upon 
city  land,  and  that  owned  by  corporations,  frees  a  portion  of  property 
from  taxation  to  which  improvements  upon  agricultural  land  ofifer  no 
adequate  analogy.  A  tax  upon  land  values  may  also  be  confused  with 
a  tax  upon  land;  in  which  case  it  seems,  as  a  greater  amount  of  land 
is  necessarily  employed  in  agriculture  than  in  other  pursuits,  that  a 
land-tax  must  bring  a  corresponding  burden  upon  agrarian  interests. 
In  other  words,  that  a  farm  of  a  thousand  acres  would  be  taxed  a 
thousand  times  as  heavily  as  an  acre  in  Wall  or  Lombard  Street. 

These  three  suppositions  involve  three  misconceptions;  the  first 
with  reference  to  the  incidence  of  the  tax;  the  second  with  reference  to 
the  effects  of  proportionate  assessment;  the  third  ignores  the  distinc- 
tion between  v^lue  and  extent. 

Considerations  with  reference  to  agricultural  land  raise  the  question 
of  the  incidence  of  a  direct  tax  on  land  values  in  general;  and,  as  this 
question  of  incidence  is  important,  not  only  to  land-owner,  but  to  the 
community,  it  should  receive  attention,  with  reference  both  to  indirect 
methods  at  present  in  operation,  and  in  connexion  with  a  direct  single 
system.  A  comparison  may  then  be  made  between  the  incidence  of 
indirect  and  direct  taxation.  In  order  to  present  material  for  such 
comparison,  it  is  essential  to  review  the  expense  of  present  methods,  to 
attempt  to  estimate  by  which  classes  of  the  community  this  expense  is 
borne,  and,  as  nearly  as  possible,  in  what  proportion.    The  same  approxi- 

239 


240  Incidence  of  Taxation  Pt.  Ill 

mations  may  then  be  suggested  with  reference  to  the  direct  assessment 
of  ground-rents  and  the  two  compared. 

In  nearly  every  country  supported  by  indirect  taxation,  with  the 
exception  of  England,  incidental  protection  is  not  only  welcomed,  but 
protective  taxes  are  imposed.  As  indirect  systems  nearly  always  in- 
volve Protection,  a  protectionist  country  should  be  selected  for  analysis; 
the  United  States  presenting  perhaps  the  most  available  field.  In  the 
fiscal  system  of  the  United  States,  unburdened  with  the  expenses  of 
long-established  monarchical  institutions  and  crystaUized  methods, 
the  most  nearly  perfect  example  of  the  evolution  of  indirect  systems 
may  be  found.  The  attention  will,  therefore,  be  directed  to  the  tax 
burdens,  intended  and  otherwise,  of  the  citizens  of  the  United  States, 
in  relation  to  the  expense  and  incidence  of  these  taxes.  A  comparison 
may  then  be  made  between  this  incidence  and  that  to  be  expected 
from  the  direct  assessment  of  the  unimproved  value  of  the  land.  It  is 
impossible  to  present  an  analysis  of  this  nature  more  clearly  and  simply 
than  in  the  form  adopted  by  Mr.  T.  G.  Shearman,  to  whose  statistical 
studies  reference  has  frequently  been  made.  The  following  estimates 
are  but  a  brief  review  of  Mr.  Shearman's  figures. 

Indirect  systems  involve  great  expense  in  the  indirect  process  of 
collection^  and  burdens  which  never  find  their  way  into  the  public 
treasury.  Revenue,  raised  from  the  taxation  of  consumption  in  the 
form  of  excise,  involves  the  restriction  of  the  natural  industries  of  the 
people  affected  by  these  taxes.  It  is  impossible  to  estimate  the  loss 
involved  in  the  effects  of  such  taxation;  it  would  probably  reach  a 
large  sum.  There  exists  no  data,  however,  upon  which  such  estimate 
may  be  made;  none,  therefore,  will  be  presented. 

The  import  duty,  on  another  hand,  presents  some  opportunity  for 
the  calculation  of  the  cost  of  revenue  raised;  the  difference  between 
the  value  of  the  quantity  consumed,  at  domestic  or  protected  prices,  and 

'The  following  presents  a  singular  instance  of  the  cost  involved  in  the  collection  of  indirect  taxes.  Under 
such  systems  the  entire  coast  of  a  country  must  be  watched,  in  order  to  prevent  smuggling,  and  customs 
maintained  at  ports  whether  anything  is  collected  or  not.  "For  several  years  the  'Financial  Reform  Al- 
manac' published,  under  the  title  of '  Curiosities  of  the  Customs,'  a  summary  of  a  Return  for  1874  issued  on 
the  motion  of  Sir  John  Lubbock  in  1876.  At  ten  ports  where  nothing  was  collected,  fifty-three  able-bodied 
servants  of  the  Crown,  costing  the  country  £7,200,  wrote  18,207  official  letters  and  forms.  At  eight  other 
ports,  fifty  Customs  officers  collected  in  the  year  a  total  of  £56  — •  about  a  halfpenny  a  head  per  day  —  at  a 
cost  of  £6,607  and  of  24,480  sheets  of  official  paper.  At  seven  ports,  where  the  collection  amounted  to 
£2,611,  the  fifty-six  officers  cost  £7,471,  and  sent  up  25,387  letters  and  forms.  At  a  dozen  other  ports  it 
cost  £7.777  to  collect  £15,305,  and  forty-six  men  were  kept  employed  in  making  25,625  official  returns  and 
collecting  under  £1  a  day  each.  Of  course,  the  larger  ports  do  far  better  than  this,  but  the  general  collec- 
tion has  to  bear  the  cost  of  all  this  appalling  waste  of  labour  and  money."  —  A  Just  Basis  of  Taxation. 
Frederick  Verinder,  p.  6. 


Bk.  Ill  Incidence  of  Indirect  Taxation  241 

the  untaxed  or  normal  value,  will  approximate  the  cost  of  the  revenue 
derived.  In  the  study  prepared  by  Mr.  Wells,  ^  it  was  shown  that  the 
people  of  the  United  States,  during  the  decade  ending  in  1887,  paid  an 
average  price  for  iron  and  steel  representing  an  excess  over  English 
prices  of  $56,000,000  per  annum.  The  average  revenue  of  the  United 
States,  derived  from  iron  and  steel  during  that  period,  was  less  than 
$15,000,000  annually;  this  shows  an  addition  in  cost  to  the  consumer  of 
nearly  four  (3I)  times  the  amount  of  the  revenue  derived.  Nor  does 
this  complete  the  estimate;  tin-plates  are  included  with  the  dutiable 
articles;  no  tin-plates  were  produced  in  the  United  States  during  the 
period  considered  and,  therefore,  the  increased  cost  of  American  pro- 
duction relates  solely  to  other  forms  of  iron  products.  ''  Excluding  these," 
says  Mr.  Shearman, ^  "the  revenue  from  iron  and  steel  has  averaged  less 
than  $12,000,000  per  annum,  during  the  period  referred  to.  The  con- 
sumer has,  therefore,  paid  over  four  and  one  half  times  as  much  as  the 
duty  in  addition  thereto."  Governor  Foss^  says:  "Although  the  entire 
yearly  income  from  tariff  duties  is  about  $326,000,000  which  means 
$3.50  a  person,  or  $17.50  a  family,  the  annual  private  tax  of  monopoly, 
which  makes  the  invitation  to  combine  irresistible,  is  over  $4,000,000,000, 
which  means  $40  a  person  or  $200  a  family."  A  tax  of  $3.50  costs  $40 
or  over  eleven  times  the  amount  of  the  tax. 

Mr.  Shearman  estimates  the  general  cost  of  revenue,  raised  by  means 
of  the  import  duty,  at  but  three  times  the  amount  produced.  The  fol- 
lowing calculations  are  made  upon  that  basis.  It  is  unessential  to 
present  any  lengthy  statistical  justification  for  such  an  estimate,  for 
the  reason  that  it  may  be  altered  or  rejected  without  involving  the 
conclusions  to  which  the  following  studies  lead. 

Indirect  taxes  are  first  paid  by  dealers,  who  reimburse  themselves 
in  prices  to  the  consumer.  Thus,  all  prices  of  taxed  goods  embody 
dealers'  profits  on  taxes  paid.  These  profits  no  doubt  represent  at 
least  25  per  cent;  they  must  in  many  cases  act  cumulatively,  as  the  same 
goods  are  handled  by  several  different  dealers;  15  per  cent  is,  how- 
ever, adopted.  The  profits  on  taxes  paid  upon  assessments  of 
buildings  and  improvements  are  probably  less;  5  per  cent  may  be  a  fair 
estimate. 

There  are  other  considerations  which  should  be  added  to  the  foregoing 

>  Cf.,  p.  36. 

*  Natural  Taxation,  p.  26. 

'  Speech  at  the  Cleveland  Dinner  of  the  National  Democratic  Club,  New  York  City,  Monday  evening, 
March4,  igi2.     TA*  rrewi,  March,  1912,  p.  541. 


242  Incidence  of  Taxation  Pt.  Ill 

in  any  attempt  to  estimate  the  cost  of  indirect  taxation.  Vested  in- 
terests, created  by  fiscal  measures,  render  the  reduction  of  such  taxes 
difficult,  thus  involving  unnecessary  burdens  and  administrative  ex- 
travagance. The  sums  raised  to  put  different  parties  in  power  must, 
of  course,  be  paid  out  of  the  people's  pockets,  back  again  into  those 
from  which  they  are  advanced.  The  possibilities  created  for  legisla- 
tive and  financial  manipulation  of  values  are  almost  all  directly  trace- 
able to  legislative  fiscal  decisions.  How  many  millions  of  dollars  an- 
nually change  hands  in  the  United  States  in  order  to  influence  fiscal 
decisions?  How  many  millions  are  annually  extracted  from  the  pockets 
of  the  people  as  a  result  of  juggling  the  securities  issued  against  these 
taxes?  The  amounts  are  probably  not  small.  They  must,  however, 
be  neglected  in  the  following  estimates,  no  data  existing  upon  which 
they  may  be  approximated.  The  calculations  presented,  therefore, 
seem  conservative  to  a  degree. 

Based  upon  some  of  the  foregoing  considerations,  the  census  returns 
for  1880,  and  other  official  statistics,  Mr.  Shearman  ^  obtains  the  fol- 
lowing estimates: 

American  Tax  Burden  of  1880. 

Import  duties $186,500,000 

Internal  revenue,  etc 147,000,000 

Increased  prices,  domestic  protected  goods       .       .  559,500,000 

Total $893,000,000 

Dealer's  profits,  15  per  cent 134,000,000 

$1,027,000,000 

Local  taxes $312,000,000 

Landlords'  and  dealers'  profits,  5  per  cent         .       .  15,600,000  327,600,000 

Grand  total $1,354,600,000 

Total  expense $1,354,600,000 

Total  revenue 645,500,000 

Increased  burden $709,100,000 

These  figures  suggest  that,  in  order  to  raise  a  revenue,  in  1880,  of 
$645,500,000,  the  people  of  the  United  States  were  taxed  $1,354,600,000. 

It  is  now  essential  to  discover,  as  nearly  as  possible,  the  burden 
imposed  by  such  taxes  and  profits  upon  the  different  classes  of  the  people, 
in  order  to  approximate  the  incidence  of  this  indirect  system.  It 
is  evident  that  these  charges  are  paid  from  a  fund  which  would  other- 

^Natural  Taxation,  p.  27. 


Bk.  Ill  Incidence  of  Indirect  Taxation  243 

wise  have  remained  in  possession  of  the  contributor  —  that  is,  from 
a  fund  which  the  members  of  the  society  would  have  saved,  or 
have  been  able  to  save,  upon  the  same  scale  of  expenditure.  It 
is  evident,  also,  that  these  taxes  are  paid  in  direct  proportion 
to  the  expense  of  lixing,  for  indirect  taxes  of  importance  must  be 
levied  upon  the  vital  and  industrial  necessaries  of  the  people. 
The  larger  the  proportion  the  expenses  of  mere  existence  bears 
to  each  income  the  greater  wUl  be  its  relative  share  of  com- 
pulsory taxation.  If,  then,  the  total  earnings  of  the  people  are 
classified,  together  with  the  normal  saving  capacity  of  each  class, 
it  seems  that  a  method  is  reached  of  approximating  the  tax 
burden  of  each  class;  for  the  taxation  of  necessaries  bears  a 
direct  relation  to  living  expenses,  and  hence  to  saving  capacity. 
Thus,  if  the  living  expenses  of  an  income  of  $1,000  are  $900,  its 
saving  capacity  $100,  and  the  tax  10  per  cent  of  expenses,  this 
income  will  save  $100  and  be  taxed  $90.  An  income  of  $100,000, 
with  living  expenses  of  $75,000  and  a  saving  capacity  of  $25,000, 
will,  under  the  same  system,  be  taxed  $7,500  and  save  $25,000; 
in  other  words,  the  smaller  income  will  be  taxed  90  per  cent  of 
its  sa\dng  capacity  and  the  larger  30  per  cent.  The  tax  will,  there- 
fore, bear  three  times  as  heavily  upon  the  accumulations  of  the 
smaller  income  as  upon  those  of  the  larger.  These  relations  are,  of 
course,  arbitrary;  it  now  remains  to  approximate  actual  conditions 
as  nearly  as  possible. 

After  a  review  of  all  returns  dealing  with  the  subject,  Mr.  Shearman* 
says:  ''Let  us  now  estimate  the  probable  savings  of  each  class,  in 
1880,  after  all  taxes  were  paid.  Labor  commissioners  have 
repeatedly  inquired  into  the  savings  of  labourers,  with  the  result 
of  fixing  these  at  not  more  than  5  per  cent,  of  such  incomes  under 
$500,  after  all  taxes  have  been  paid.  As  taxes  consume,  directly 
and  indirectly,  at  least  15  per  cent,  of  a  labourer's  average  in- 
come, the  average  labourer  is  not  so  thriftless  as  it  might  at 
first  appear.  The  middle  class  find  it  difficult  to  save  more  than 
10  per  cent.  But  the  savings  of  the  rich  proceed  upon  a  rapidly  in- 
creasing ratio,  until  we  reach  some  men  who  save,  with  ease,  95  per 
cent,  of  their  income. 

"Constructing  a  table  upon  the  foundation  thus  afforded,  taking 
American  statistics  so  far  as  they  go,  and  using  British  statistics  only 

>  Ibid.,  p.  33. 


244 


Incidence  of  Taxation 


Pt.  Ill 


for  the  purpose  of  supplementing  and  classifying  American  figures, 
the  following  is  the  result: 

American  Incomes,  Expenses,  and  Savings,  1880. 


Class 

Persons 

Income 

Average 
Expenses 

Average 

Range 

Average 

Savings 

I. 

50 

over 

$1,000,000 

$1,500,000 

$250,000 

$1,250,000 

II. 

500 

250,000  to 

1,000,000 

450,000 

100,000 

350,000 

III. 

5,000 

50,000  to 

250,000 

88,000 

40,000 

48,000 

IV. 

12,500 

20,000  to 

50,000 

27,500 

15,000 

12,500 

V. 

27,000 

10,000  to 

20,000 

14,000 

9,000 

5,000 

VI. 

75, 000 

5,000  to 

10,000 

6,400 

5,000 

1,400 

VII. 

250,000 

2,000  to 

5,000 

2,700 

2,300 

400 

VIII. 

850,000 

700  to 

2,000 

1,000 

850 

150 

IX. 

2,500,000 

350  to 

700 

400 

380 

20 

X. 

i3,672,ooounder 

350 

300 

285 

IS 

"It  is  now  necessary  to  tabulate  the  aggregate  expenses  and  savings 
of  each  class,  as  an  entire  class. 

American  Incomes,  Expenses,  and  Savings,  1880. 


Total 

Total 

Total 

Class 

Persons 

Income 

Expenses 

Savings 

I. 

50 

$75,000,000 

$12,500,000 

$62,500,000 

II. 

500 

225,000,000 

50,000,000 

175,000,000 

III. 

5,000 

440,000,000 

200,000,000 

200,000,000 

IV. 

12,500 

343,750,000 

187,500,000 

156,250,000 

V. 

27,000 

378,000,000 

243,000,000 

135,000,000 

VI. 

75,000 

480,000,000 

375,000,000 

105,000,000 

VII. 

250,000 

675,000,000 

575,000,000 

100,000,000 

VIII. 

850,000 

850,000,000 

722,500,000 

127,500,000 

IX. 

2,500,000 

1,000,000,000 

950,000,000 

50,000,000 

X. 

13,672,000 

4,101,600,000 

3,896,520,000 

205,080,000 

17,392,050 

$8,568,350,000 

$7,212,020,000 

$1,356,330,000 

"The  incidence  of  taxation  is  now  to  be  considered.  The  gross 
expense  of  the  people's  living  has  been  estimated  as  above,  at  $7,212,- 
000,000  for  the  year  1880.  Taxation  was  distributed  nearly  pro  rata 
upon  this.    The  whole  burden  of  taxation,  including  its  intended  and 


Bk.  Ill  Incidence  of  a  Direct  Tax  245 

unintended  effects,  has  been  shown  to  be  $1,350,000,000.  This  was 
equal  to  iS^\  per  cent  on  expenses.  As  the  total  savings,  before 
taxes  are  deducted,  would  amount  to  $2,700,000,000,  the  ultimate 
burden  imposed  by  taxation  and  its  effect  was  50  per  cent,  of  all  national 
savings. 

"But,  while  this  is  the  average,  that  average  is  based  on  a  vast  dis- 
proportion of  burdens.  The  tax  of  i8j^  per  cent  upon  expenses 
means  a  tax  of  less  than  4  per  cent,  upon  the  easy  savings  of  the  richest 
class,  but  of  78  per  cent  upon  the  hard  savings  of  the  poorer  class. 
Indirect  taxation,  therefore,  bears  twenty  times  as  heavily  upon  the 
average  poor  man  as  it  does  upon  the  average  rich  man." 

The  incidence  of  the  indirect  taxation  of  living  expenses  upon  two 
average  incomes  may  now  be  considered  without  selecting  either 
extreme,  say  Class  III  and  Class  IX.  Incomes  $S8,ooo  and  $400, 
expenses  $40,000  and  $380,  savings  $48,000  and  $20, respectively;  in- 
cidence of  tax  18  per  cent  of  li\'ing  expenses.  The  first  income  will 
be  taxed  $7,200,  or  15  per  cent  of  its  saving  capacity;  the  smaller  income 
will  be  taxed  $68.40,  or  342  per  cent  of  that  capacity;  3.42  times  as 
much  as  it  can  save.  It  may  now  be  supposed  that  the  tax  burdens  are 
lightened  50  per  cent  by  direct  or  less  expensive  methods.  The  first 
income  would  then  be  able  to  save  $3,600  in  addition,  9  per  cent  increase 
of  saving  capacity;  the  second  income  could  save  $34.20  —  171  per  cent 
increase  of  savings. 

These  relations  contain  a  fairly  satisfactory  explanation  why  the 
poorer  classes  have  never  been  able  to  accumulate,  in  proportion  to  the 
increasing  wealth  of  a  society  supported  by  the  indirect  taxation  of 
living  expenses.  An  indirect  fiscal  system  not  only  renders  it  im- 
possible for  the  poor  to  accumulate  in  proportion  to  increasing  social 
wealth,  but  makes  it  possible  for  the  richer  classes  to  absorb  the  social 
wealth,  and  at  the  same  time  accumulate  in  a  progressively  increasing 
ratio  thereto. 

The  essential  feature  of  indirect  systems  is  not  the  amount  levied, 
nor  the  expense  created;  but  the  fact  that  all  such  systems  are  assessed 
directly  upon  the  compulsory  expenses  of  existence;  thus  progressively 
decreasing  the  accumulating  capacity  of  the  smaller  incomes,  in  inverse 
ratio  to  their  amount,  with  an  exactly  reversed  effect  upon  the  larger 
fortunes.  This  effect  is  due  neither  to  the  amount  raised  nor  to  the 
expense  of  the  system;  but  to  the  fact  that  a  progressively  increasing 
proportion  of  the  smaller  incomes  is  brought  under  the  influence  of 


246  Incidence  of  Taxation  Pt.  Ill 

taxation,  and  a  progressively  increasing  proportion  of  the  larger  incomes 
is  exempt.  The  power  of  accumulation,  therefore,  of  each  income, 
taxed  on  compulsory  living  expenses,  increases  cumulatively  as  its 
amount  and  decreases  progressively  as  the  income  diminishes.  The 
burden  created  by  an  indirect  policy  varies  inversely  as  the  means  of 
the  contributor. 

Thus  an  indirect  system  of  taxation  has  a  direct  effect  in  the  dis- 
tribution of  social  wealth.  The  taxation  of  living  expenses,  through 
the  increasing  proportion  which  these  bear  to  earnings  as  earnings 
decrease,  is  the  cause  of  such  conditions. 

More  than  a  quarter  of  a  century  has  passed  since  the  period  to  which 
these  estimates  refer.  They  are  here  examined  as  being  more  valuable 
than  later  compilations,  for  they  may  be  studied  in  the  light  of  the  sub- 
sequent industrial  evolution  of  the  United  States.  The  process  of 
the  concentration  of  social  wealth  which  they  illustrate,  has  there 
proceeded  at  an  unprecedented  rate  during  the  past  twenty-five  years^ 
through  causes  largely  influenced  by  the  multiplication  of  indirect 
taxes. 

These  figures,  moreover,  although  referring  to  a  specific  period  of 
a  specific  nation,  are  of  universal  application  and  develop  a  principle 
involved  in  the  action  of  all  indirect  systems.  The  essential  feature 
in  the  distribution  of  social  burdens  is  the  relation  which  the  basis  of 
the  system  bears,  actually  and  relatively,  to  the  means  of  the  contrib- 
utor. Every  tax,  therefore,  upon  every  indirect  schedule  based  upon 
living  expenses,  will  impose  a  direct  burden  upon  the  individual  in 
proportion  to  the  relation  which  living  expenses  bear  to  income.  The 
burden  will  thus  fall  cumulatively  where  vital  needs  are  nearest  total 
income,  and  bring  with  it  relative  exemption  where  vital  needs  form  the 
smallest  proportion  of  the  means  involved.  This  will  be  the  effect 
of  a  single  assessment.  With  annual  assessments,  the  distribution  of 
the  entire  wealth  of  the  society  will  be  affected,  and  a  progressive  proc- 
ess of  accumulation  toward  the  larger  incomes  set  in  while  the  fields 
of  pauperism  and  unemployment  will  increase  proportionately:  To 
those  who  have  will  be  given,  and  from  those  who  have  not  will  be 
taken  away,  even  the  little  they  possess. 


CHAPTER  II 

THE  INCIDENCE  OF  A  DIRECT  TAX  ON  LAND  VALUES 

IN  ANY  attempt  to  estimate  the  incidence  of  the  direct  tax,    it 
should  be  remembered  that  the  burdens  of  an  indirect   and  a 
direct  system  are  different.     In  the  United  States,  for  instance, 
it  seems  that  in  1880  the  people  paid  more  than  $1,350,000,000  in 
order  to  raise  a  revenue  of  $645,500,000.    By  direct  methods  there 
would  in  all  likelihood  have  been  a  sa\ing  of  more  than  the  difference 
of  $700,000,000  presented. 

In  order  to  pursue  inquiry  with  special  reference  to  the  agricultural 
class,  the  population  may  be  divided  as  follows: 

1.  The  landless. 

2.  The  land-owners. 

3.  Farmers,  whether  owning  or  renting  land. 

I.  Under  a  direct  system,  the  landless  class  would  be  relieved  of 
present  burdens,  and  its  capacity  for  wealth  accumulation,  progressively 
increased  as  the  burdens  were  withdrawn.  The  result  would  thus  be, 
not  only  to  bring  relief  from  existing  taxation,  but  to  create  a  power  of 
accumulation  at  present  non-existent. 

n.  With  reference  to  the  land-owning  class,  Mr.  Shearman^  says: 
"It  has  already  been  shown  that  the  concentration  of  all  American  taxes 
upon  American  land-owners  would  not  absorb  half  of  their  ground- 
rents.  But  it  would  be  a  great  mistake  to  assume  that  such  taxation 
would  absorb  half  of  their  whole  income,  or  anything  approaching 
to  it.  No  allowance  has  thus  far  been  made  for  the  important  fact  that, 
considered  as  an  entire  class,  the  owners  of  ground-rents  also  own  all  the 
buildings  and  other  improvements  upon  their  land,  besides  a  much  larger 
share  of  all  personal  property,  in  proportion  to  their  number,  than  any 
other  class  of  the  community.  All  these  things  would  be  relieved  from 
taxation  under  the  system  here  proposed.  All  taxes  on  real  estate 
and  probably  75  per  cent,  of  the  taxes  on  personal  property  are  paid 
by  land-owners.  (Not  more  than  one  tenth  of  the  persons  who  are 
not  assessed  for  some  land  are  ever  assessed  for  any  personal  property, 

» Ibid.,  p.  177. 

247 


248  Incidence  of  Taxation  Pt.  Ill 

taking  the  whole  country  together.)  They  also  pay  at  least  their  full 
share,  in  proportion  to  their  numbers,  of  tariff  and  excise  taxes,  and  of 
the  burdens  which  indirectly  flow  from  those  taxes.  As  American, 
land-owners  constituted  48  per  cent,  of  the  heads  of  families  in  1890 
they  will  be  released  from  48  per  cent,  of  those  burdens,  the  amount  of 
which  was  estimated,  on  a  previous  page,  at  $1,050,000,000  per  annum, 

"  The  local  taxes  on  both  real  and  personal  property  in  1890  amounted 
to  $470,652,000.  As  real  property  constituted  three  fourths  of  all 
assessed  values,  its  owners  paid  three  fourths  of  these  taxes  ($352,- 
989,000),  three  fourths  of  the  taxes  on  personal  property  ($88,248,000), 
and  48  per  cent,  of  the  $1,050,000,000  burden,  created  by  federal 
indirect  taxation  ($504,000,000).  These  were  the  burdens  borne  by 
real  estate  owners,  as  a  class,  in  1890:  all  of  which  would,  under 
the  taxation  of  ground-rents  alone,  be  replaced  by  a  single  tax  of 
$828,541,000. 

*'The  effect  of  such  a  change  in  taxation,  upon  American  owners  of 
real  estate,  taken  as  an  entire  class,  would  be  as  follows: 

"American  real  estate  owners  paid,  in  1890,  under  the  present  system 
of  taxation: 

All  local  taxes  on  real  estate $352,989,000 

75  per  cent,  of  local  taxes  on  personal  estate 88,248,000 

48  per  cent,  of  federal  taxes  and  burdens  attendant  thereon  .       .       .       504,000,000 

$945  >  23  7.000 

They  would  pay,  if  all  taxes  were  concentrated  on  ground-rents: 

All  local  taxes $470,652,000 

All  federal  taxes 357,889,000      828,541,000 


Net  reduction  of  burdens  on  real  estate    .       .       .  $116,696,006 

That  the  concentration  of  taxes  on  ground-rents  would  reduce  the 
present  burden  on  real  estate  may  seem  impossible,  yet,  in  the  light  of 
the  great  relative  cost  of  indirect  taxes,  such  an  assumption  is  not  ex- 
travagant. The  incidental  burdens  of  revenue  indirectly  raised  are  in 
all  probability  more  than  as  great  again  as  the  revenue  itself.  Through- 
out the  foregoing  calculations  these  burdens  have  been  placed  at 
$700,000,000.  "They  include,"  says  Mr.  Shearman,  "a  large  private 
profit,  through  enhanced  prices,  maintained  by  tariffs  and  excise  laws; 
and  they  also  include  a  sum,  quite  as  large,  absolutely  wasted,  by  keep- 
ing up  prices  on  goods  which,  after  all,  do  not  afford  an  average  profit 


Bk.  Ill  Incidence  of  a  Direct  Tax  249 

to  domestic  producers.  Land-owners  as  land-owners  do  not  get  the 
profit,  and  nobody  gains  by  the  waste. 

"No  doubt  a  small  section  of  the  land-owning  class  do  get  a  large 
share  of  the  profits  arising  from  the  monopolies  fostered  by  protective 
tariff  and  excise  taxes.  But  more  than  nine  tenths  of  the  land-owners 
derive  no  benefit  from  these  monopolies.  All  of  them  must  pay  their 
proportion  of  the  taxes  and  private  tribute,  levied  by  laws  creating 
monopolies;  but  the  profit  accruing  goes  to  those  who  can  run  the 
monopolies,  whether  they  own  or  only  hire  land. 

"Direct  taxation  would  put  an  end  to  all  such  monopolistic  profits 
and  all  the  indirect  effects  of  indirect  taxation.  Owners  of  land  who 
did  not  hold  any  share  in  tariff-bred  or  similar  monopolies,  would  save,  by 
substituting  direct  for  indirect  taxation,  their  share  of  the  $700,000,000 
annually  lost  to  the  people  at  large  in  this  way.  And  this  saving  more 
than  outweighs  all  the  additional  taxation  falling  upon  them,  through 
the  exemption  of  labor  and  personal  property  from  taxes. 

"Another  reason  is  of  even  greater  importance,  and  clears  up  the  whole 
apparent  mystery.  These  statistics  show  that  if  all  the  land  were 
owned  by  a  class,  on  perfectly  equal  terms,  in  equal  shares,  they 
would  all  gain  by  direct  taxation.  But  they  do  not  stand  on  an  equal 
footing  or  own  equal  shares.  On  the  contrary  it  is  now  undisputed 
that  more  than  75  per  cent,  in  value  of  all  American  real  estate,  in- 
cluding railways,  is  owned  by  less  than  10  per  cent  of  the  whole  number 
of  land-owners.  Indeed,  it  is  practically  undisputed  that  this  amount 
is  held  by  less  than  5  per  cent,  of  the  whole  number,  and  that  half  of 
all  the  value  is  held  by  one  one  hundredth  of  all  owners. 

"This  fact  immediately  puts  a  new  light  upon  the  whole  question. 
Accepting  the  far  too  conservative  estimate  that  one  tenth  of  all  the 
owners,  or  600,000  families,  own  three  fourths  of  all  the  land,  and  con- 
structing a  table,  showing  the  effect  of  the  change  in  taxation  upon 
them,  we  should  reach  very  different  results. 

"These  families,  being  much  richer  than  the  remaining  5,500,000, 
of  course  pay  even  now  a  much  larger  share  of  taxes  of  all  kinds.  Own- 
ing three  fourths  of  all  real  estate,  they  must  now  pay  three  fourths  of 
the  taxes  on  that,  or,  in  round  numbers,  $264,000,000.  They  doubt- 
less pay  one  fourth  of  all  personal  taxes  or,  $29,000,000.  Their  quota 
of  federal  taxes,  etc.,  would  be  very  much  larger  than  that  of  the  same 
number  of  small  land-owners.  It  would  not  be  less  than  $200,000,000. 
On  the  other  hand,  this  class  includes  nearly  all  those  persons  who 


250  Incidence  of  Taxation  Pt.  Ill 

derive  profit  from  tariffs,  monopolies,  and  bounties;  all  of  which  would 
be  swept  away  by  a  natural  system  of  taxation.  This  class,  as  a  whole, 
would  suffer  some  loss. 

"But  the  line  must  be  drawn  still  higher  up.  The  profits  of  arti- 
ficial monopolies  and  bounties  are  almost  entirely  divided  among  less 
than  50,000  land-owners.  The  remaining  6,000,000  get  practically 
none  of  these  profits.  The  line  of  division,  therefore,  must  be  drawn 
between  the  50,000  families,  which  own  at  least  30  per  cent,  of  all  the 
land  values  of  the  United  States  and  the  6,000,000  who  own  the 
remainder. 

"Allowing  one  half  the  burdens,  indirectly  resulting  from  tariffs 
and  excise  laws  to  be  mere  waste,  bringing  no  profit  to  anybody,  still, 
in  years  of  average  prosperity,  annual  profits  to  the  amount  of  $350,- 
000,000  would  remain;  of  which  more  than  $300,000,000  go  to  the 
50,000  largest  land-owners. 

''Let  us  now  construct  a  table  showing  the  incidence  of  direct  taxa- 
tion upon 

The  50,000  Largest  La)id-owners. 

They  paid  in  1890: 

30  per  cent,  of  taxes  on  real  estate    ....  $106,000,000 

10  per  cent,  of  taxes  on  personal  estate    .        .        .  11,700,000 

10  per  cent,  of  tariff,  etc.,  taxes,  profits,  and  waste  .  105,000,000 

$222,700,000 
They  gained  profits  from  the  tariff,  etc 300,000,000 


Their  net  profits  from  the  system  of  indirect  taxation 

were         ....  $  77,300,000 

Under  direct  taxation,  they  would  make  no  tariff  profits, 

and  would  pay  30  per  cent,  of  aU  taxes     .        .        .  249,000,000 


Their  net  loss,  from  direct  taxation $326,300,000 

"This  explanation  makes  it  easy  to  understand  how  the  vast  ma- 
jority of  land-owners  may  actually  gain  by  assuming  the  whole  burden 
of  direct  taxation.  By  so  doing  they  get  rid  of  paying  a  tribute  of 
$350,000,000  to  a  small  band  of  bounty-fed  capitalists,  and  of  an  annual 
waste  of  $350,000,000  more.  The  loss  of  this  tribute  will  fall  entirely 
upon  the  few  who  depend  upon  unjust  legislation  for  their  profits. 

"But  the  case  even  of  the  aflflicted  50,000  is  not  so  bad  as  it  at  first 
seems.  Let  us  review  their  whole  situation.  Possessing  30  per  cent, 
of  all  real  estate  values,  they  enjoy  an  annual  rent,  from  land  and  build- 
ings, of  close  upon  $700,000,000.     Their  income  from  tariff  profits  and 


Bk.  Ill  [Incidence  of  a  Direct  Tax  251 

the  like  has  been  put  at  $300,000,000.  They  would  lose  by  the  adoption 
of  direct  taxation  only  three  per  cent,  of  their  rents;  although  they 
would  lose,  and  ought  to  lose,  the  whole  of  the  tribute  which  they  levy 
upon  their  fellow  citizens,  by  means  of  an  abuse  of  the  taxing  power. 
The  immense  benefits  which  would  be  conferred  upon  the  country,  by 
the  abolition  of  indirect  taxation,  would  certainly  increase  rent  by 
much  more  than  three  per  cent. ;  and  thus  even  this  small  class  would 
lose  nothing  but  the  illegitimate  profits,  which  they  make  by  an  abuse 
of  the  taxing  powers  of  the  national  government. 

"Yet  there  must  be  some  class  which  would  lose  absolutely  by  the 
concentration  of  taxes  upon  ground-rents.  There  is.  It  is  that  small 
number  of  persons  whose  chief  investment  is  in  vacant  land  and  whose 
chief  occupation  is  keeping  land  out  of  use." 

III.  The  effects  of  a  direct  system  upon  the  agricultural  land-owner 
may  now  be  discussed.  After  an  analysis  of  the  census  returns  for 
1890,  in  order  to  establish  the  basis  for  the  estimates  to  follow,  Mr. 
Shearman^  says:  "The  proportion  of  land  values  held  by  farmers 
shrinks  when  put  to  the  test  of  statistics  as  much  as  does  their  numerical 
proportion.  The  same  census  returns  aggregate  the  real  value  of 
farms  at  (  in  round  numbers)  $13,279,000,000,  out  of  a  total  taxable 
real  estate  value  of  $46,000,000,000,  including  railroads,  etc.  As  much 
more  than  one  third  of  all  farms  are  not  owned  by  farmers,  we  must 
deduct  at  least  one  third  from  this  farm  value,  in  estimating  the 
amount  owned  by  farmers.  This  would  leave  them  in  possession  of 
a  value,  in  both  land  and  its  improvements,  of  about  $8,800,000,000, 
or  less  than  one  fifth  of  the  whole  value  of  real  estate,  which  closely 
corresponds  with  their  proportion  of  the  population. 

"The  independent  farmer,  therefore,  is  a  rapidly  diminishing  factor 
in  American  politics.  .  .  .  The  farmer  is  apt  to  cry  out  against 
what  he  calls  the  injustice  of  exempting  from  all  taxation  the  mag- 
nificent buildings  sometimes  erected  in  cities,  forgetting  that  such 
buildings  always  stand  upon  the  most  expensive  land,  while  his  own 
farmhouse  and  barn  stand  upon  land  of  utterly  insignificant  value. 
In  adjusting  taxation,  the  only  question  of  importance  is  as  to  the  relative 
proportion  which  will  be  borne  by  different  classes;  and  it  is  of  no  impor- 
tance whatever  that  any  single  piece  of  property  should  pay  much  or 
little,  provided  all  other  properties  of  the  same  kind  pay  in  exact 
proportion  with  it.    A  farmhouse,  costing  $1,500  to  build,  will  stand 


>  Ibid.,  p.  184-186, 


252  Incidence  of  Taxation  Pt.  Ill 

upon  a  piece  of  land  which,  including  the  surrounding  garden,  on  an  am- 
ple scale,  would  not  be  worth  more  than  $15.  But  an  average  city 
house,  costing  $10,000  to  build,  will  stand  upon  a  lot,  worth  at  least 
$5,000;  while  a  warehouse,  costing  $50,000  to  build  will  frequently 
stand  upon  a  lot  worth  $50,000. 

'*So  far,  therefore,  as  the  mere  value  of  land  which  is  required  for 
the  purpose  of  supporting  the  house  or  building  of  any  kind  is  concerned, 
the  farmer  would  gain  largely  by  concentrating  taxes  upon  that  and 
exempting  all  buildings."  This  may  be  shown  by  the  following  ap- 
plication of  the  principle:  If  a  tax  of  $1,165  is  to  be  laid  upon 
the  three  pieces  of  property  mentioned,  the  result,  under  the  present 
system,  would  be  as  follows: 

"Farmhouse  and  land,  $1,515;  city  house  and  land,  $15,000;  ware- 
house and  land,  $100,000.  Total,  $116,515;  tax  rate,  1  per  cent. 
Tax  on  the  farmhouse,  $15.1 5,  on  the  city  house,  $150,  on  the  warehouse, 
$1,000. 

"Under  a  system  exempting  all  buildings  and  improvements,  the 
assessment  would  be  as  follows: 

"Farm  land,  $15;  city  land,  $5,000;  warehouse  land  $50,000. 

"The  gross  tax  remaining  the  same  ($1,165),  it  would  be  divided  on  a 
total  assessment  of  only  $55,015,  requiring  a  tax  rate  of  2|  per  cent. 
The  farmhouse  owner  would  pay  32  cents;  the  city  house  owner,  $106; 
and  the  warehouse  owner,  $1,059.  Reduction  of  farmer's  tax,  g8  per 
cent:' 

It  may  be  said  that  the  taxation  of  ground  values  involves,  not  only 
the  assessment  of  the  land  upon  which  a  farmer's  house  may  stand, 
but  of  his  entire  farm  as  well,  thus  bringing  a  larger  proportion  of 
agricultural  than  urban  land  under  fiscal  influence.  Here  arises  the 
confusion  of  ideas  with  reference  to  the  taxation  of  land,  and  the  taxa- 
tion of  land  values.  If  every  piece  of  land  in  the  United  States,  or  in 
any  other  country,  were  valued,  and  a  certain  number  of  horseshoes 
were  piled  upon  each  portion  —  every  shoe  representing  one  dollar, 
franc  or  shilling,  as  the  case  might  be  —  and  apportioned  exactly 
to  the  number  of  dollars,  francs,  or  shillings  representing  the  value 
of  the  land;  it  is  evident  that  great  piles  of  horseshoes  would  accumu- 
late on  the  valuable  sites  of  cities,  and  that  land  in  the  country  would  be 
relatively  free.  Long  lines  of  horseshoes  would  be  strung  over  rail- 
way routes,  along  water  fronts,  telegraph  and  telephone  property, 
while  adjoining  land  would  have  relatively  few  or  none.      If,  now, 


Bk.  Ill  Incidence  of  a  Direct  Tax  253 

it  were  suggested  to  assess  taxes  upon  these  horseshoes,  and  the  word 
"land"  never  mentioned,  it  is  obvious  that  the  greater  the  number  of 
horseshoes,  the  greater  would  be  the  amount  and  proportion  of  taxes 
levied.  The  fact  that  all  the  buOdings,  and  all  the  personal  property 
in  the  nation  were  exempt  from  taxation  would  make  no  difference. 
Where  a  given  amount  is  to  be  assessed,  it  would  be  assessed  in  proportion 
to  the  number  of  horseshoes  and  nothing  else;  where  a  given  percentage 
is  assessed,  it  would  represent  a  given  percentage  of  the  number  of 
horseshoes,  and  nothing  else.  As  cannot  be  too  often  repeated,  the 
essential  feature  in  a  just  fiscal  system  is  not  concerned  with  the  amount 
of  property  nor  with  the  things  taxed;  but  is  concerned  with  the  pro- 
portions in  which  the  tax  is  distributed.  Covering  the  land  with  horse- 
shoes in  proportion  to  its  value,  and  then  assessing  taxes  in  proportion 
to  the  number  of  horseshoes,  is  identical  with  a  direct  fiscal  system 
based  upon  land  values;  for  contributions  would  be  apportioned  with 
reference  to  the  number  of  dollars,  francs  or  shillings,  representing  the 
values  of  the  land,  and  not  to  acreage.  If  the  effects  of  raising  revenue 
from  horseshoes,  piled  upon  land  in  proportion  to  value,  is  ever  under- 
stood by  agriculturists,  a  great  fiscal  light  may  dawn  upon  the  bucolic 
intelligence. 

The  effect  of  a  direct  system  upon  agricultural  land  in  relation  to 
the  present  system  may  be  shown  in  the  following  illustration  with 
reference  to  Boston  and  the  land  in  its  vicinity.  "No  statement  of 
the  whole  amount  of  personal  property  assessed  upon  Massachusetts' 
farms  alone  is  accessible,"  says  Mr.  Shearman, ^  "but  by  comparing 
three  counties,  Berkshire,  Franklin,  and  Hampshire,  in  which  the  value 
of  farms  in  1885  constituted  more  than  half  the  value  of  all  real  estate, 
with  Suffolk  county,  in  which  farms  constituted  only  the  one  hundred 
and  twentieth  part  of  all  real  estate,  we  can  reach  a  very  fair  conclusion 
as  to  the  effect  of  the  exemption  of  both  personal  property  and  improve- 
ments. 

"As  we  are  compelled  to  compare  the  farm  values  of  1885  with  the 
total  assessments  of  1890,  there  is  no  use  in  giving  precise  figures;  and 
round  numbers  will  therefore  be  used.  The  assessed  value  of  all 
property  in  Suffolk  County  was  $851,000,000.  In  the  three  farming 
counties  it  was  $91,000,000.  If  personal  property  and  buildings  had 
been  exempted,  and  land  had  been  assessed  at  its  unimproved  value, 
the  assessment  of  Suffolk  would  have  been  $377,000,000,  and  that  of 

*  Ibid.,  p.  196. 


254  Incidence  of  Taxation  Pt.  Ill 

the  three  farming  counties  would  have  been  less  than  $22,000,000. 
Thus  the  assessment  of  Suffolk  County  (which  is  only  another  name  for 
Boston)  would  have  been  reduced  56  per  cent.;  but  the  assessment  of 
the  farming  counties  would  have  been  reduced  76  per  cent.  Assuming 
the  rate  of  taxation  to  be  i  per  cent.,  on  the  present  valuation,  Boston 
would  pay,  under  the  present  system,  $8,510,000  and  the  farming 
counties  $910,000.  Under  the  reformed  system,  Boston  would  pay 
$8,900,000,  while  the  farming  counties  would  pay  only  $520,000.  The 
burden  upon  farms  would  be  lightened  by  43  per  cent.,  and  yet  the 
burden  of  Boston  would  be  increased  by  less  than  5  per  cent.;  the  State 
receiving  precisely  the  same  revenue,  in  any  case.  Or,  to  put  it  the 
other  way,  Massachusetts  farmers  are  paying  75  per  cent,  more  of 
the  State  taxes,  under  the  present  system,  than  they  would  pay  under 
a  tax  upon  the  unimproved  value  of  the  land  alone." 

With  these  considerations  in  mind,  showing  how  direct  assessment 
upon  the  value  of  the  land  brings  a  relatively  lessened  tax  burden  to 
agriculture,  the  effects  upon  American  farmers  as  a  class  may  be  dis- 
cussed. 

"  Using  round  numbers,"  says  Mr.  Shearman,^  "it  has  been  shown  that 
the  total  ground-rent  of  the  United  States  for  1890  was  $1,380,000,000; 
the  whole  amount  of  taxes  to  be  provided  for  was  $828,000,000;  the 
local  taxes  on  real  estate  were  $354,000,000,  and  on  personal  property, 
$117,000,000;  the  national  taxes,  all  indirect,  were  $358,000,000;  while 
the  burden  of  private  profit  or  of  waste,  caused  by  the  nature  of  in- 
direct taxes,  was  about  $700,000,000  in  1880,  and  could  not  well  be 
less  in  1890. 

"It  will  not  make  much  difference  whether  the  farmer's  share  of  land 
values  in  the  United  States  is  estimated  at  more  or  less  than  30  per  cent, 
since  their  proportion  of  local  taxation  will  vary  in  proportion  thereto. 
But  according  to  the  census  of  1890  the  value  of  farms  was  less  than 
30  per  cent,  of  the  value  of  all  taxable  real  estate  and  land  privileges. ^ 

"Farmers  have  never  made  any  profit  out  of  the  higher  prices  caused 
by  indirect  taxation,  and,  therefore,  they  have  paid  their  share  of  all 
profit  so  made,  without  recei\dng  any  part  of  it  back. 

"Since  American  farms  constituted,  in  1890,  30  per  cent,  of  all  real 
estate,  their  owners  must  have  paid  at  least  30  per  cent,  of  the  taxes 
on  real  estate.  In  fact  they  paid  more;  because  land  franchises  did 
not  pay  their  share.     .     .     . 

*  Ibid.,  p.  191-194. 

*  True  value  of  all  taxable  real  estate,  over  $46,000,000,000;  of  farms,  $13,279,000,000. 


Bk.  Ill  Incidence  of  Indirect  Taxation  255 

"Indirect  taxes  are  of  course  paid,  not  in  proportion  to  wealth  or 
income,  but  according  to  consumption.  If  farmers  live  as  well  as  other 
people,  they  pay  such  taxes  in  proportion  to  their  numbers,  not  their 
property.  It  may  be  assumed  that  they  are  more  frugal  than  most 
other  land-owners.  ,  But  farm  owners,  who  form  one  fourth  of  all 
families,  live  in  much  better  style  than  do  the  great  mass  of  landless 
people.  They,  therefore,  pay  at  least  one  fourth  of  all  indirect  taxes. 
We  thus  reach  the  conclusions  now  stated. 

"American  farm  owners  pay,  under  the  present  system  of  taxation: 

30  per  cent,  of  taxes  on  real  estate  ($354,000,000) $106,200,000 

25  per  cent,  of  taxes  on  personal  property  ($117,000,000)       .        .        .         29,250,000 
25  per  cent,  of  indirect  taxes  and  profits  thereon  ($1,050,000,000)        .       262,500,000 

$397,950,000 

"They  would  pay  under  the  system  here  proposed: 
30  per  cent,  of  all  necessary  taxes,  with  no  indirect  burdens  attached 

($828,000,000) $248,400,000 


Reduction  of  Fanners  Taxes  through  direct  taxation  ....  $149,550,000 
"Thus  the  farmers  would  save  much  more  than  one  third  of  their 
present  tax  burdens  by  the  concentration  of  taxes  on  ground-rents  alone. 
.  .  .  Of  course,  the  proposal  to  collect  taxes  from  only  one  source 
implies  that  the  burden  is  to  be  increased  upon  the  class  which  controls 
that  source.  But  the  proposal  is  that  the  whole  burden  shall  be  placed 
upon  the  owners  of  groimd  rents,  including  the  franchises  on  land. 
Such  owners  form  a  very  small  minority  of  the  residents  of  cities  and 
towns;  and  therefore  a  vast  majority  of  such  residents  would  not  suffer 
any  increase  of  burdens,  through  any  amount  of  relief  which  might  be 
given  to  farmers.  .  .  There  is  no  conflict  of  interest  between  those 
who  live  in  cities  and  those  who  live  on  farms.  But  there  is  a  great 
conflict  of  interest  between  those  who  own  city  land  and  those  who 
own  the  farms.  Under  a  single  tax  upon  ground-rents,  farm  owners,  as 
a  class,  would  not  pay  nearly  so  large  a  share  of  taxes  as  they  do  now; 
because  the  value  of  their  land  is  so  much  less  than  the  value  of  city, 
town  and  railway  land." 

Before  leaving  the  subject,  it  may  be  of  interest  to  make  a  direct 
statistical  comparison  between  the  results  of  the  indirect  taxation  of 
living  expenses  and  normal  distribution.  This  may  be  done  by  means 
of  summarizing  the  results  of  a  study  of  the  following  table,  showing  the 
amount  of  ten  classes  of  American  incomes  in  18S0,  together  with  their 
respective  expenses,  tax  burdens,  and  savings,  before  and  after  taxation.  ^ 

»  Cf.,  Ibid.,  p.  36. 


2  $6 


Incidence  of  Taxation 


Pt.  Ill 


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Bk.  Ill  Incidence  of  a  Direct  Tax  257 

These  figures  show  apparently  that  the  total  normal  accumulating 
capacities  of  the  rich  and  labouring  classes  were  not  very  different  in 
amount,  each  being  a  little  over  $1,000,000,000;  the  difference  in  favour 
of  the  labouring  class.  The  result  of  an  indirect  process  of  taxation 
levied  upon  living  expenses  was,  however,  that  the  total  earnings  of 
the  people,  instead  of  being  distributed  in  proportion  to  natural  accumu- 
lation, were  divided  in  such  a  way  that  nearly  3^  times  (3.43)  the  natural 
share  of  the  labouring  class  fell  into  the  hands  of  the  rich.  It  is  evident 
that  this  process,  continued  under  an  indirect  system,  and  over  a  period 
of  time,  must  increase  progressively  in  effect;  for,  as  the  savings  of  the 
larger  incomes  increase,  their  powers  of  accumulation  will  be  propor- 
tionately augmented.  Under  a  direct,  and  properly  apportioned  fiscal 
system,  no  such  distortion  in  the  distribution  of  wealth  would  occur 
after  the  tax  had  been  paid.  This  distorted  distribution  is,  however, 
the  characteristic  feature  of  all  fiscal  systems  based  upon  the  taxation 
of  living  expenses. 

Such  systems  act  progressively  throughout  all  the  incomes  of  a 
society,  and  result  in  the  cumulatively  increasing  distortion  of  the 
distribution  of  the  social  wealth,  until  the  process  destroys  itself  — 
becomes  top-heavy,  and  results  in  the  inevitable  revolutionary  collapse. 
This  seems,  in  a  few  words,  to  present  the  essential  features  of  the  his- 
tory of  every  society  based  upon  indirect  fiscal  methods.  The  blind 
will  lead  the  blind  through  this  process  of  progressive  accumulation  and 
distortion  until  they  both  fall  into  the  pit. 


Book  IF 

FISCAL   PROBLEMS 
CHAPTER  I 

LABOUR 

Section  I  —  Labour  ahd  Indirect  Taxaiioh.    Section  II  —  Labour  aJid 

Direct  Taxation. 


Section  I  —  Labour  and  Indirect  Taxation 

IN  AN  interesting  work  dealing  with  the  London  poor,  written  during 
the  earlier  decades  of  the  last  century,  the  author  presents  the  then 
existing  conditions  governing  a  certain  trade  of  the  metropolis. 
In  this  trade,  with  changing  methods  of  production,  a  custom  arose 
among  the  workers  of  employing  their  children,  which,  owing  to  the 
nature  of  the  work,  was  possible  while  they  were  very  young.  The 
increased  competition  thus  increased  the  economic  desirability  of  large 
families,  and  the  need  of  putting  still  younger  children  to  work.  The 
result  was  that  the  larger  the  families  the  less  became  the  relative  return 
for  the  goods  produced;  while,  without  large  families,  the  workers  were 
unable  to  compete  at  all.  Says  Mr.  Mayhew:^  "The  only  means  of 
escape  from  the  inevitable  poverty,  which  sooner  or  l^ater  overwhelms 
those  in  connection  with  the  cheap  shoe  trade,  seems  to  the  workmen  to 
be  by  the  employment  of  his  whole  family  as  soon  as  his  children  are 
able  to  be  put  to  the  trade  —  and  yet  this  only  increases  the  very  de- 
pression that  he  seeks  to  avoid."  The  workers  engaged  in  this  occupa- 
tion, young  and  old  alike,  were  thus  caught  in  the  toils  of  a  process, 
the  accumulative  evil  effects  of  which  were  intensified  by  their  indus- 
try and  the  conditions  of  their  existence. 

The  workmen  of  the  days  of  Mr.  Mayhew  are  long  since  in  their 
graves;  their  children  very  old,  or  passed  beyond  economic  conditions 
to  which  they  owed  their  earthly  experiences.     The  conditions  pre- 

^London  Labor  and  the  London  Poor,  Vol.  II.,  p.  357. 

258 


Bk.  IV  Labour  259 

sented,  however,  by  Mr.  Mayhew  with  reference  to  this  trade  seem,  with 
certain  modifications,  more  or  less  typical  of  conditions  governing  the 
existence  of  London  labour  at  large.     In  other  words,  the  greater  the 
number  of  workers,  the  greater  will  be  the  competition  among  them; 
and,  consequently,  the  lower  the  returns  to  labour,  until  wages  reach 
a  point  beyond  which  they  cannot  be  reduced,  or  the  level  essential  to 
support  physical  existence.     Later  conditions  in  London,  studied  in  the 
exhaustive  treatise  of  Mr.  Charles  Booth,  ^  seem  to  support  this  position. 
Mr.  Roimtree's'^  study  of  conditions  in  York  leads  to  the  opinion  that 
such  conditions  are  not  limited  to  London,  and  if  the  history  of  the 
subject  is  studied  as  presented  in  the  works  of  Prof.  Thorold  Rogers,' 
extending  over  a  period  of  hundreds  of  years,  it  may  seem  that  the  indus- 
trial masses  of  Great  Britain  present  more  or  less  analogous  conditions. 
On  the  other  side  of  the  Atlantic,  a  number  of  students,  among  whom 
may  be  mentioned  Mr.  Jacob  Riis^  and  Mr.  Robert  Hunter,^  present 
allied  conclusions.     On  the  continent,  the  works  of  Karl  Marx,^  Prince 
Krapotkin,^  together  with  a  host  of  other  sociological  writers,  show 
that  these  conditions  are  not  limited  to  English-speaking  communities 
and  more  or  less  analogous  observations  could  readily  be  presented 
from  the  chief  nations  of  the  East.     The  bulk  of  the  industrial  masses, 
it  seems,  is  forced,  by  present  systems  of  production  and  distribution, 
to  live  and  labour  on  the  verge  of  what  is  called  the  "poverty  line," 
that  is  with  returns  supplying  but  the  needs  of  physical  existence,  while 
the  slightest  adversity,  unemployment,  disease  or  old   age  opens  the 
pit  of  want.      This  vital  pressure  of  the  industrial  masses  upon  the 
means  of  subsistence  seems  fairly  constant  the  world  over.     Even  when 
the  effects  of  the  migration  of  the  past  decades,  from  the  old  world  to 
the  new,  are  considered,  conditions  remain  fundamentally  unchanged, 
and  populations  from  which  a  number  of  millions  are  withdrawn,  but 
propagate  in  an  increasing  ratio  until  the  gap  has  been  filled. 

"It  has  been  observed,"  says  Mr.  Hunter,^  "again  and  again  that 
emigration  from  a  country  causes  an  increase  in  the  number  of  children 
born  in  that  country.    William  Farr  noted  that  in  Norfolk,  England, 

'  Life  and  Labour  of  the  People  of  London. 

•  Poverty:  A  Study  of  Town  Life. 

•  Six  Centuries  of  Work  and  Wages. 

•  How  the  Other  Half  Lives. 
'  Poverty. 

•  Capital. 

'  Fields,  Factories,  and  Workshops. 

•  Poverty,    p.     jgg. 


i6o  Fiscal  Problems  Pt.  Ill 

emigration  was  followed  by  large  families.  Commenting  upon  this 
fact,  he  says  that  when  the  young  people  emigrate,  the  parents  re- 
maining at  home  have  on  an  average  five  children  instead  of  two  or 
three,  or  none.  ^  In  almost  every  country  in  Europe  the  same  tend- 
ency has  been  observed  .  .  .  Professor  Richmond  Mayo-Smith 
says:  'Emigration  does  not  threaten  to  depopulate  the  countries  of 
Europe.  Had  there  been  no  emigration  during  the  century,  it  is  not 
probable  that  the  population  of  Europe  would  have  been  any  greater 
than  it  is.  The  probabilities  are  all  the  other  way.  Europe  has  never 
grown  so  fast  as  during  the  present  century. '^  .  .  .  There  is  a 
strange  and  rather  startling  probability  that  the  twenty  million  persons 
who  have  emigrated  to  this  country  have  been  replaced  by  twenty  or 
so  million  persons  who  would  not  have  been  born  had  these  emigrants 
remained  at  home." 

The  flood  of  humanity  pouring  into  the  United  States  may  not 
have  had  much  effect  upon  the  normal  growth  of  population.  The 
foreign-born  element  seems  to  supplant  the  native  born  to  an  approxi- 
mately equivalent  extent. 

"  Professor  John  R.  Commons,"  says  Mr.  Hunter,  "who  is  now  perhaps 
our  foremost  student  of  the  subject,  says,  in  his  study  of  Immigra- 
tion for  the  Industrial  Commission,  'It  is  a  hasty  assumption  which 
holds  that  immigration  during  the  nineteenth  century  has  increased 
the  total  population  in  the  United  States.'^  Professor  Commons' 
statement  is  based  upon  the  same  principle  of  the  growth  of  population 
which  was  considered  in  the  previous  paragraph.  Immigration  to  this 
country  has  a  striking  influence  upon  our  birth-rate.  As  emigration 
tends  to  increase  the  number  of  births  among  those  remaining  at  home, 
so  immigration,  it  is  thought,  causes  a  decrease  in  the  birth-rate  of  the 
persons  already  in  the  country  to  which  immigrants  come.  The  late 
President  Francis  A.  Walker,  who  was  the  superintendent  of  the  cen- 
suses of  1870  and  1880,  and  therefore  at  the  fountain  head  of  infor- 
mation on  the  subject,  vigorously  maintained  that  had  there  been 
no  immigration  to  this  country  during  the  last  seventy  years,  the  native 
element  would  have  filled  by  an  increased  number  of  births,  'the  places 
which  the  foreign  element  has  usurped.'  "^ 

Whether  this  position  is  accepted  or  not,  the  pressure  of  the  industrial 

•  Vital  Statistics,  by  William  Fair,  p.  62. 

•  Emigration  and  Immigration,  by  Richmond  Mayo-Smith,  p.  23. 

*  Industrial  Commission,  Vol.  XV.,  p.  277. 

*  Discussions  in  Economics  and  Statistics,  by  Francis  A.  Walker,  Vol.  II.,  pp.  417-426. 


Bk. IV  Labour  261 

masses  upon  the  means  of  subsistence  seems  a  fairly  constant  con- 
dition, not  to  be  neglected  in  the  study  of  questions  dealing  with  labour. 
A  study  of  the  ''labour  problem"  deals  with  a  mass  of  humanity,  clinging 
to  existence,  as  it  were,  through  the  pressure  of  its  natural  fecundity 
upon  its  vital  requirements.  And  here  occurs  the  essential  relation 
of  indirect  fiscal  systems  to  labour.  Present  industrial  society  is  based 
upon  fiscal  conceptions  involving  the  taxation  of  the  necessaries  of  life, 
but  these  necessaries  are  the  vital  threads,  so  to  speak,  by  means  of  which 
the  industrial  masses  cling  to  existence.  An  indirect  fiscal  system 
thus  bears  not  an  important,  but  a  vital,  relation  to  the  industrial 
masses.  Political  organizations  based  upon  the  indirect  taxation  of 
necessaries, literally  nourish  themselves  upon  the  life-blood  of  the  people. 
No  study  of  labour,  therefore,  which  neglects  the  action  of  the  national 
fiscal  system  under  which  the  labour  is  considered,  will  touch  the  heart 
of  the  question.  The  action  of  an  indirect  taxation,  based  upon  the 
necessaries  of  existence,  is  the  vital  element  in  the  labour  problem. 

Questions  of  this  nature  deal  directly  with  the  production  and  distri- 
bution of  wealth.  As  no  form  of  industrial  wealth  can  be  created  without 
labour,  no  question  can  deal  with  labour  in  particular,  without  having 
to  do  with  the  process  of  wealth  production  and  distribution;  labour 
being  one  of  the  three  factors  in  production,  and  wages  one  of  the  three 
channels  of  distribution.  The  study  of  the  labour  problem,  therefore, 
leads  at  once  to  an  analysis  of  wealth  production  and  distribution  in 
relation  to  fiscal  systems. 

There  are  three  elements  in  production :  Land,  Capital,  and  Labour. 
From  the  union  of  these  arises  the  annual  sum  of  wealth  brought  into 
existence  in  any  industrial  society.  This  annual  total  of  production 
derived  from  the  three  productive  elements  is  distributed  through  three 
channels  of  revenue:  Rent,  Profits,  and  Wages.  All  annual  wealth 
is  resolvable  into  these  three  forms  of  revenue.^ 

The  taxation  of  revenue,  in  whatever  form,  falls  eventually  upon  these 
sources  of  revenue,  singly  or  combined.  Rent,  Profits,  and  Wages, 
therefore,  may  be  taxed,  but  nothing  else,  for  there  is  no  other  form  of 
economic  revenue  to  tax. 

Present  methods  of  taxation  are  largely  involved  with  duties  levied 
upon  commodities,  these  commodities  forming  a  large  proportion 
of  the  living  expenses  of  the  masses  of  the  people.  The  taxation  of 
the  staples  of  life  and  industry,  therefore,  falls  more  heavily  upon 

>Cf.,  p.  123. 


262  Fiscal  Problems  Pt.  Ill 

the  smaller  incomes  than  upon  the  larger.  The  bulk  of  the  smaller 
incomes  is  naturally  derived  from  manual  labour.  The  taxation  of 
necessaries  is,  therefore,  to  a  large  extent,  the  taxation  of  wages.  In 
the  preceding  analysis  of  conditions  in  the  United  States  in  1880,  it 
was  shown  that  the  incomes  of  over  thirteen  millions  of  persons  were 
apparently  taxed  about  twenty  times  as  heavily,  relatively,  as  the 
incomes  of  about  fifty  persons.  But  the  great  number  of  smaller  incomes, 
together  with  their  disproportionate  taxation,  will  produce  a  large  pro- 
portion of  the  total  revenue  derived.  In  the  estimates  cited,  ^  the  rev- 
enue derived  from  the  labouring  class  was  more  than  twice  as  much  as 
from  the  other  two  classes  combined.  This  shows  that  a  large  percentage 
of  all  revenue,  produced  by  indirect  taxation  of  living  expenses,  is  de- 
rived from  the  taxation  of  wages.  But  results  more  important  than 
the  mere  taxation  of  wages  will  be  produced  by  such  a  system.  The 
disproportionate  taxation  of  wages  afifects,  not  wages  alone,  but  the 
process  of  distribution  of  wealth  throughout  the  society. 

Total  revenue  is  resolvable  into  three  forms:  Rents,  Profits,  and 
Wages;  to  tax  one  of  these  disproportionately  involves,  not  only  the 
taxation  of  that  form  of  revenue,  but  the  proportionate  exemption  of 
the  other  two  at  the  same  time.  Thus,  to  tax  wages  disproportionately 
creates  a  relative  relief,  or  process  of  accumulation,  with  reference  to 
rent  and  profits.  And  here  the  results  of  the  taxation  of  living  expenses 
but  begin.  The  disproportionate  taxation  of  wages  not  only  exempts 
profits  from  normal  contribution,  and  tends  to  profit  accumulation, 
but  creates  the  possibility  of  forced  and  abnormal  profits  through  the 
action  of  import  and  excise  duties.  This  disproportionate  burden  upon 
wages  exempts  profits,  and  may  cause  their  artificially  stimulated 
increase.  An  analogous  train  of  thought  is  suggested  with  reference 
to  rent.  Abnormal  burdens  upon  wages  bring  abnormal  exemption 
for  rent,  with  the  result  that  socially  created  wealth,  in  the  form  of 
land  values,  will  accumulate  in  the  hands  of  individual  rent  owners. 

It  might  be  thought  that  the  effects  of  an  indirect  burden  upon  vital 
needs  would  end  here;  but  perhaps  the  most  important  effects  of  such 
a  system  are  yet  to  be  discussed.  It  is  obvious  that  the  progressive 
accumulations  of  wealth  in  the  hands  of  rent  and  profit  owners,  will 
give  these  economic  advantage  over  the  owners  of  wages.  The  most 
important  of  these  will  be  the  practical  expulsion  of  the  wage  owner 
from  the  land  in  its  valuable  forms,  leaving  the  rent  and  profit  owner 

I  Cf.,  p.  25(5, 


Bk. IV  Labour  263 

in  possession.  Thus,  the  indirect  taxation  of  living  expenses,  or  the 
disproportionate  taxation  of  wages,  will  throw  control  of  the  valuable 
land  of  a  country  into  the  hands  of  the  richer  classes.  But  the  control 
of  the  land  will  bring  into  existence  other  and  more  important  influences. 
The  control  of  the  land,  and  the  social  wealth  it  represents,  not  only 
makes  the  industrial  class  practically  dependent,  politically  and  eco- 
nomically, upon  the  capitalist  and  land-owning  classes,  but  places  the 
political  and  economic  policy  of  the  nation  in  their  hands. 

A  society,  therefore,  supported  by  indirect  means,  will,  apparently, 
develop  the  following  political  elements:  (i)  A  fiscal  system  creating 
forced  and  artificial  values,  through  disproportionate  taxation  of  wages 
and  disproportionate  exemption  of  profits  and  franchises.  (2)  A 
legislative  system,  permitting  the  incorporation  of  these  values.  (3) 
A  highly  centralized  and  organized  capitalist  class,  with  interests  inti- 
mately involved  with  tax  schedules  and  legislation.  (4)  An  industrial 
mass  of  wage  workers,  caught  in  a  double  process  of  competition,  low- 
ering wages  on  one  side,  raising  rent  and  profits  on  another,  while 
contributing  the  bulk  of  the  revenue  necessary  to  keep  the  process 
in  existence. 

The  man  who  controls  these  combined  influences  is  in  possession 
of  a  power  little  less  than  magic.  He  may,  in  order  to  "regulate  the 
balance  of  trade,"  "tax  the  foreigner,"  or  gather  labour  under  a  pro- 
tecting wing,  create  enormous  values  by  the  imposition  of  the  most 
inoffensive  and  "patriotic"  import  duties.  He  may  then  issue  corpor- 
ate certificates  against  the  values  represented,  and  the  vista  of 
indirect  protectionist  finance  is  opened  to  the  discerning  eye.  He 
is  now  in  a  position  to  develop  the  possibilities  of  an  indirect  fiscal 
system.  The  paths  before  him  are  bewildering.  He  may  do  almost 
anything.  He  may  keep  control  of  the  properties,  and  inflate  or 
depress  the  securities  through  legislative  decisions,  statements  or  com- 
binations on  the  exchange.  He  may  simply  over-capitalize  the  prop- 
erties and  sell  them  to  the  people  outright.  If  the  people  do  not  buy, 
no  trouble  is  occasioned;  he  sells  them  to  the  people,  in  spite  of  them- 
selves, through  this  or  that  insurance  company  or  fiduciary  institution 
which  he  may  happen  to  control.  If  he  does  not  care  to  take  such  a 
step,  no  difficulty  occurs;  he  borrows  whatever  is  needed  from  this 
or  that  bank  or  trust  company,  of  which  he  happens  to  be  president, 
or  whose  directorate  is  interested  in  the  securities.  If  his  interests  are 
in  any  way  furthered  by  supporting  the  values  of  the  over-capitalized 


264  Fiscal  Problems  Pt.  Ill 

obligations,  he  enters  into  an  agreement  with  reference  to  a  freight 
rate,  or  classification  of  goods  with  a  railway  or  transportation  company, 
whose  directors  may  happen  to  hold  some  of  the  securities  involved, 
and  the  thing  is  done.  If,  for  any  reason,  it  grows  inconvenient  to 
continue  payments  on  these  obligations,  no  difficulty  is  caused;  he 
anticipates  the  fall  of  the  securities  on  the  exchange,  and  stops  the 
payments.  That  is,  all  he  has  to  do  is  to  put  the  values  in  his  pockets 
over  again  as  they  disappear.  In  this  way,  by  means  of  an  indirect 
tax,  he  takes  the  money  out  of  the  people's  pockets  to  create  the  values 
in  the  first  place;  he  then  takes  the  money  out  of  the  people's  pockets 
which  the  values  represent,  from  this  or  that  fiduciary  institution, 
and  he  then  takes  the  money  out  of  the  people's  pockets  to  continue 
the  values  in  existence.  If,  for  any  reason,  this  becomes  inconvenient, 
he  has  but  to  take  the  values  out  of  the  people's  pockets  all  over  again, 
as  they  go  out  of  existence,  whenever  he  chooses  to  allow  them  to  fall 
away  to  nothing.  If  any  of  the  misguided  populace  do  not  appre- 
ciate these  patriotic  efforts  to  protect  them,  but  begin  investigations  or 
proceedings  of  some  kind,  no  annoyance  need  be  met.  Arrangements 
are  made  with  this  or  that  statesman,  or  legislative  assembly,  with 
reference  to  this  or  that  enactment,  technicality,  or  committee,  and 
everything  is  straightened  out.  He  may  then  begin  to  protect  the  people 
all  over  again  from  the  dangers  of  the  "balance  of  trade"  and  "pauper 
labour,"  or  arm  them  against  the  foreigner  with  a  trusty  tariff-weapon, 
which  will  tax  the  food  out  of  their  mouths,  while  he  patriotically 
unloads  the  weapons  upon  the  fiduciary  institutions  in  the  form  of 
dangerously  inflated  securities. 

The  foregoing  methods  of  indirect  protectionist  finance  may  be 
modified  or  combined  in  infinite  ramifications.  If  other  fields  are 
sought,  attention  may  be  turned  to  organization.  Industry  affected 
by  an  indirect  tax  is  generally  ready  to  organize.  Another  area  is 
opened  for  patriotic  activities.  Thoroughly  organized  capital  is  the 
one  potent  factor  in  protectionist  legislation;  and  another  vista  appears, 
leading  into  a  maze  of  organization,  disorganization  and  reorganization, 
practically  without  end.  The  indirect  tax  forms  the  basis  of  the  struct- 
ure; the  certificates  of  incorporation  form  the  motives  of  the  designs; 
the  banks,  the  insurance  companies,  and  the  legislative  assemblies  are 
the  masons  and  contractors;  while  the  statesmen  and  the  financiers 
are  the  builders  and  the  architects.  And  it  might  well  be  asked,  what 
more  patriotic  inspiration  could  be  sought  than  to  design  and  build 


Bk.  IV  Labour  265 

in  such  materials.  Every  loan,  tax,  or  decision  inflates  or  depresses 
a  security  as  desired;  every  legislative  enactment,  with  reference  to  a 
tax  or  a  franchise,  sweeps  the  savings  of  the  people  this  way  or  that, 
as  decided;  every  market,  protected  or  suppressed,  pours  a  golden 
stream  in  any  given  direction;  and  if  surfeited  with  these  Napoleonic 
conquests,  the  builders  have  but  to  turn  into  their  pockets  a  few  of 
these  streams,  with  an  import  or  excise  duty,  and  gracefully  retire 
from  the  scene  amid  the  plaudits  of  a  grateful  people. 

All  this  may  be  done  while  the  industrial  populace  is  as  unconscious 
of  the  process  and  as  incapable  of  freeing  itself  as  a  frog  prepared  for 
vivisection.  The  whole  organized  forces  of  the  society,  ecclesiastical, 
legislative,  and  military,  support  the  measures;  the  people  neither 
understand  what  is  being  done  to  them,  nor  would  be  able  to  free  them- 
selves if  they  understood.  The  chief  difference  between  the  frog  and 
the  people  is  that  the  latter  make  a  great  show  of  choosing  the  operators; 
but  what  difference  can  it  make  to  either  who  handles  the  knife?  As 
far  as  the  frog  or  the  people  is  concerned,  the  result  is  the  same. 

The  effects  of  the  indirect  taxation  of  living  expenses,  in  relation 
to  the  industrial  masses,  may  be  summarized  as  follows:  (i)  The 
obvious  disproportion  of  the  burden  laid  upon  wages  and  the  smaller 
incomes;  (2)  the  forced  and  relative  inflation  of  rents  and  profits, 
together  with  the  unnatural  process  of  accumulation  created;  (3) 
the  consequent  control  of  socially  created  wealth  by  the  larger  incomes; 
(4)  the  possibilities  of  value  manipulation  through  the  control  of  fiscal 
and  legislative  decisions. 

Section  II — Labour  and  Direct  Taxation 

Rent,  Profit,  and  Wages  are  the  only  forms  of  economic  revenue; 
therefore,  the  only  legitimate  subjects  of  taxation.  Rent,  however, 
may  be  divided  into  two  distinct  portions;  one,  created  by  the  individual, 
or  improvement  rent;  another,  created  by  society,  or  ground-rent.  If 
this  ground-rent  is  taxed  and  nothing  else,  it  is  evident  that  all  taxes 
on  wages,  profits,  and  improvement  rent  will  be  repealed.  The  most 
important  results  of  this  freedom  from  taxation  will  be  that  the  three 
sources  of  income  will  bear  their  normal  relations  to  each  other,  and 
that  wages  will  neither  be  disproportionately  taxed,  nor  profits  and 
improvement  rent  disproportionately  exempt.  The  immediate  effect 
of  such  a  change  might  be  a  proportionately  increased  accumulating 
power  among  smaller  incomes;  in  other  words,  where  all  taxation  of 


266  Fiscal  Problems  Pt.  Ill 

living  expense  is  withdrawn,  there  occurs  no  progressively  increasing 
burden  laid  on  poverty  through  the  taxation  of  the  necessaries  of  life. 

This  might  not  be  the  only  result  of  a  direct  system.  Where  land 
contributes  to  the  society  in  proportion  to  society's  contribution  to  it, 
holding  land  out  of  use  becomes  an  unprofitable  occupation.  One  of 
two  results  may  therefore  be  expected;  either  the  land  will  be  made 
productive,  or  put  on  the  market.  These  two  tendencies  working 
together  would,  apparently,  redound  to  the  advantage  of  labour.  The 
first  would  cause  a  demand  for  productive  labour  in  agriculture,  the 
building  trades  and  so  forth;  the  second  would  render  it  increasingly 
possible  for  labour,  with  small  capital,  to  employ  itself  directly  upon 
the  land.  In  this  way  the  demand  for  productive  labour  might  be 
increased,  the  competition  lessened  among  the  industrial  masses,  and 
greater  accumulating  capacity  developed  among  the  smaller  incomes, 
through  the  elimination  of  the  taxation  of  necessaries.  The  repeal  of 
these  taxes,  together  with  the  added  expense  of  holding  land  out  of  use, 
might  bring  labour  into  wider  and  more  direct  contact  with  the  soil, 
causing  normal  land  distribution  in  accordance  with  its  most  productive 
use.  This  tendency  might  result  in  a  rise  in  wages  until  the  return  to 
labour  had  reached  its  normal  level. 

There  exists,  perhaps,  no  more  instructive  history  of  labour  than  that 
of  Professor  Thorold  Rogers.  As  this  work  is  studied,  the  complete  sub- 
jection of  labour  to  the  land-owning  and  legislative  classes  is  pre- 
sented with  singular  force,  and  this  subjection  is  brought  about  chiefly 
through  fiscal  legislation.  All  that  is  necessary  to  cause  the  complete 
dependence  of  the  industrial  masses  upon  capital  is  to  exempt  the  land 
from  just  contribution,  and  increase  burdens  upon  living  expenses. 
This  is  shown  by  Professor  Rogers  with  reference  to  English  labour 
after  the  examination  of  material  dating  from  the  earliest  records  until 
yesterday;  and  English  labour  is  shown  to  be  as  much  at  the  mercy  of 
the  English  land-owner  after  the  Wat  Tyler  insurrection  as  before. 
Labour  may  be  "freed"  by  legislative  enactment,  but  this  freedom  may 
have  slight  results  where  a  class  retains  control  over  fiscal  decisions. 
The  legislation  capable  of  granting  manumission  was  capable  of  passing 
Acts  regulating  the  rate  of  wages,  ^  of  debasing  the  coin  in  which  the 
wages  were  paid,^  of  creating  the  Quarter  Sessions  assessments,  ^  of 


*  Work  and  Wages.     Thorold  Rogers,  p.  489. 
»  p.  428. 
»  P-  3S3- 


Bk.  IV  Labour  267 

extinguishing  the  ancient  rights  of  the  peasantry  with  reference  to 
pasture  and  fuel/  of  permitting  enclosures, ^  of  confiscating  the  funds 
of  the  labour  guilds,^  of  passing  the  Law  of  Settlement,^  of  establishing 
the  Corn  Laws,^  of  placing  a  disproportionate  burden  of  taxation  upon 
labour,^  and  of  reducing  wages  still  further  by  means  of  import  and 
excise.'^ 

There  can  apparently  be  but  one  result  of  legislation  of  this  nature  — 
a  constant  deterioration  in  the  condition  of  the  industrial  masses 
subject  to  its  influence.  "From  one  point  of  view,"  says  Professor 
Rogers,^  "the  analyist  of  the  'good  old  times'  may  be  able  to  show  that 
life  was  shorter,  disease  more  rife,  the  market  of  food  more  unsteady, 
the  conveniences  and  comforts  of  life  fewer  and  more  precarious  than 
they  now  are.  From  another  point  of  view,  and  that  by  far  the  most 
accurate  and  exact,  the  relative  position  of  the  workman  was  one  of 
far  more  hope  and  far  more  plenty  in  the  days  of  the  Plantagenets 
than  it  has  been  in  those  of  the  House  of  Hanover;  that  wages  were, 
relative  to  their  purchasing  power,  far  higher,  and  the  margin  of  enjoy- 
able income  over  necessary  expenditure  was  in  consequence  far  wider." 

A  study  of  these  and  analogous  facts  in  every  country  shows  that 
the  only  thing  essential  to  the  subjugation  of  labour  is  a  fiscal  system 
which  keeps  land  out  of  its  reach.  The  shifting  of  the  basis  of  the 
national  revenue  from  the  land  to  consumption,  by  means  of  excise  and 
import  duties,  is  a  means  perfectly  adapted  to  this  end.  These  taxes  will 
create  a  network  around  the  industrial  masses  of  a  society,  and  while 
the  revenue  necessary  for  social  organization  can  be  largely  drawn  from 
their  needs,  the  wealth  which  they  create  collectively,  in  the  form  of 
land  values,  will  fall  entirely  into  the  control  of  individuals.  In  this 
way,  the  wage  workers  may  be  held  at  swords'  length  from  the  land, 
while  forced  to  contribute  the  bulk  of  the  expense  necessary  to  keep 
the  sword  sufficiently  sharp  for  the  purpose.  This  process  would  be 
more  difficult  under  a  direct  system.  First,  because  no  legislature 
would  possess  the  power  of  destroying  the  relative  value  of  wages  through 
the  taxation  of  the  necessaries  of  life.     Second,  because  the  absorption 


1  Ibid.,  p. 

'p. 

488. 

'p. 

349- 

*P. 

433- 

6  p. 

489. 

•p. 

489. 

'p. 

489. 

•P 

490. 

268  Fiscal  Problems  Pt.  Ill 

of  unimproved  land  values  by  the  society  would  cause  all  land  to  be 
brought  to  its  most  productive  use.  That  is,  bring  labour  itself  into 
more  direct  contact  with  it. 

There  is  another  influence  which  might  be  brought  into  existence 
under  a  direct  fiscal  system.  Reasons  have  been  presented  for  be- 
lieving that  the  wealth  society  creates,  in  the  form  of  land  values, 
is  greater,  in  annual  value,  than  the  cost  of  social  administration. 
If  such  is  the  case,  how  should  the  surplus  be  used  after  social  needs 
are  met?  Industrial  conditions  require  the  supplanting  of  the  aged, 
if  society  is  to  be  maintained  at  its  maximum  of  productive  activity. 
But  the  aged  have  contributed  their  share  to  the  wealth  and  develop- 
ment of  the  society,  and  society  owes  them  the  surplus  after  social 
needs  have  been  satisfied.  It  seems,  therefore,  if  such  a  surplus  exists, 
that  it  should  be  distributed  annually  throughout  the  older  members 
of  the  social  organization  in  the  form  of  old  age  pensions.  Such  a 
system  might  have  effect  upon  administration.  Where  every  individual 
has  a  direct  pecuniary  interest  in  maintaining  land  values  at  a  maximum, 
and  social  expenses  at  a  minimum,  administrative  extravagance  and 
waste  might  not  be  so  common  as  at  present. 

The  relation  of  a  direct  fiscal  system  to  labour  may  be  summarized 
as  follows:  (i)  By  means  of  freeing  wages  and  the  smaller  incomes 
from  disproportionate  taxation,  their  value  and  accumulating  capacity 
may  be  increased.  (2)  To  render  unproductive  land  owning  unprof- 
itable, might  bring  land  nearer  the  reach  of  labour;  thus  increasing 
its  capacity  for  self-employment.  (3)  The  elimination  of  taxes  on 
industry  might  increase  the  productive  and  consuming  power  of  the 
society,  and  thus  the  demand  for  productive  labour.  (4)  The  distribu- 
tion of  surplus  social  revenue  among  the  aged  might  insure  labour  its 
legitimate  share  in  socially  created  wealth. 


CHAPTER  II 

RAILWAYS 

MR.  HERBERT  SPENCER,   in   his   Autobiography,'^    tells 
of  Huxley  saying  that  Spencer's  idea  of  a  tragedy  was 
a  "deduction  killed  by  a  fact."     From    the    Spencerian 
point  of   view  with    reference   to   tragedy,  few  subjects 
are  so  fraught  \\dth  wreck  and  ruin  as  the  history  of  railway  trans- 
portation, when  brought  in  contact  with  conventional  economic  gen- 
eralizations. 

Stephenson's  combination  of  escape  steam-blast  and  tubular  boiler, 
of  strong  draught  and  large  heating  surface,  resulting  in  the  application 
of  steam  to  transportation,  brought  into  existence  one  of  the  greatest 
forces  in  the  industrial  world  —  the  modern  railway.  As  the  origin 
and  development  of  this  power  are  studied,  conventional  theories 
are  found  singularly  at  fault.  There  is,  perhaps,  no  subject  entering 
into  the  process  of  the  production  and  distribution  of  wealth,  to  which 
familiar  economic  conceptions  are  less  applicable,  and  in  reference  to 
which  conclusions  may  be  advanced  with  greater  diffidence.  The 
different  interests  are  not  only  so  numerous,  but  so  widely  diversified  and 
so  little  subject  to  generalization  governing  other  conditions,  that  no 
little  temerity  is  required  in  hazarding  any  opinion.  The  proposition, 
however,  seemingly  least  out  of  harmony  with  established  conditions 
and  the  most  intelligent  opinion  is  as  follows:  The  interests  of  rail- 
ways are  so  inextricably  involved  with  the  interests  of  society  at  large, 
that  it  is  impossible  to  distinguish  at  what  point  they  diverge,  and, 
therefore,  in  the  majority  of  cases,  the  permanent  interests  of  a 
society  may  best  be  furthered  by  the  furtherance  of  the  permanent 
interests  of  its  railways. 

There  are  two  points  of  view  from  which  the  modern  railway  may  be 
studied:  the  external  and  internal.  Of  the  two,  the  latter  is  the  more 
instructive  and  deserving  of  attention.  From  it,  alone,  may  be  seen 
the  functions  of  the  various  parts  of  the  railway,  considered  as  a  living 
organism.     It  is  impossible  to  approximate  any  even  moderately  accept- 

*  Vol.  I.,  p.  467. 

269 


270  Fiscal  Problems  Pt.  Ill 

able  conception,  with  reference  to  railway  methods,  without  apprecia- 
tion of  the  requisites  upon  which  the  organism  depends  for  its  existence. 
There  was  few  evils  of  present  railway  methods;  few  forms  of  railway 
combination  or  discrimination,  whether  with  reference  to  rival  rail- 
ways, waterways,  competitive  points,  corporations  or  individuals, 
which  have  not  their  reason  for  existence  in  some  way  involved  with 
the  larger  interests  of  the  road;  and  hence,  in  some  way,  with  the  larger 
interests  of  the  community.  These  two  interests  can  thus  never  be 
separated  in  any  comprehensive  study  of  railway  problems. 

The  railway  stands  in  a  unique  position  in  economic  history,  differing 
widely  and  in  many  ways  from  other  forms  of  enterprise.  The  orthodox 
economic  conception  of  competition,  generally  applicable  to  other 
forms  of  commercial  activity,  fails  when  brought  in  contact  with  the 
railway.  The  assumption  that  the  expansion  and  contraction  of 
capital  or  the  checking  of  production,  may  safely  be  left  to  regulate 
prices  under  any  and  all  conditions,  does  not  apply  to  railways  to  the 
same  extent  as  to  other  enterprise;  in  some  cases  has  no  application. 
The  capital  invested  in  railway  transportation  is  of  little  or  no  value 
for  other  purposes  and  cannot,  therefore,  be  readily  transferred;  nor 
can  it  cease  production  when  prices  reach  an  unprofitable  level  as 
can  other  capital  in  the  majority  of  cases.  It  is  nearly  always  less  dis- 
advantageous for  railways  to  continue  operation  at  a  loss  than  to  dis- 
continue at  a  larger  loss.  The  bankrupt  road  and  bankrupt  competition 
are  thus  brought  into  existence,  a  form  of  competition  neither  frequent 
nor  persistent  in  other  occupations. 

A  railway  constitutes  an  enterprise  in  which  cost  of  service  is  prac- 
tically no  guide  to  price;  it  may  pay  to  render  certain  service  perman- 
ently at  less  than  cost,  on  account  of  more  than  compensating 
advantages.  Back-loading  may  form  an  important  factor  in  the  estab- 
lishment ^of  rates,  and  discrimination  with  reference  to  certain  points 
is  an  almost,  if  not  completely,  unavoidable  result.  Under  certain 
conditions  it  may  be  more  advantageous  for  a  road  to  make  long, 
rather  than  short  hauls;  and  that  over  the  same  line,  at  the  same  time, 
and  at  the  same  rate.  Through  traffic  may  be  more  profitable  than 
local  traffic,  and  vice  versa;  and  this,  irrespective  of  distance,  points, 
tonnage,  or  many  of  the  considerations  which  at  first  seem  the  con- 
trolling factors  in  the  establishment  of  rates.  Competition  at  one 
point  may  render  it  essential  to  reduce  rates  below  those  of  a  non- 
competitive point;  yet  local  discrimination  of  this  nature  need  not  be 


Bk.  IV  Railways  271 

more  unfair  or  unnatural  than  the  discrimination  of  a  canal,  with 
reference  to  a  point  higher  thar>  another:  difference  in  elevation  re- 
quiring a  greater  number  of  locks,  and  thus  rendering  transportation 
more  expensive.  Yet,  the  situation  of  a  town  in  the  neighbourhood 
of  a  waterway  or  of  another  railway,  is  a  natural  condition,  closely 
analogous  to  the  greater  or  less  elevation  of  a  point  with  reference 
to  a  canal.  Discrimination  against,  or  in  favour  of,  individuals  is 
among  the  greatest  difficulties  met  from  the  external  point  of  view. 
Yet  even  here  it  might  at  times  be  shown  that,  under  certain  conditions, 
enterprise  otherwise  impossible  could  be  built  up  in  this  way. 

Competition  between  railways,  as  understood  between  other  forms 
of  industry,  is  practically  out  of  the  question.  The  ultimate  result 
between  competing  roads  must,  apparently,  always  be  some  form  of 
agreement  as  to  territory,  traffic,  rates  or  division  of  earnings. 

The  railway  stands  again  in  a  peculiar  position  with  reference  to  the 
community,  the  administration,  its  patrons,  and  to  other  railways. 
Its  corporate  existence,  in  the  first  place,  requires  a  certain  amount  of 
legal  regulation  involving  legislation.  Again,  in  exercising  the  right 
of  eminent  domain,  as  railways  must,  the  railway  depends  upon  ad- 
ministrative support;  as  also  where  built  and  run  with  aid  of  govern- 
mental subsidies.  These  and  other  influences  bring  railways  peculiarly 
under  legislative  and  administrative  control,  naturally  suggesting 
legislative  relief  from  difficulties.  Yet  legislative  influence,  where 
extended  beyond  the  essential,  is  not  always  an  unmixed  benefit  to  the 
community.  In  a  certain  sense,  there  is  no  more  reason  for  a  society 
to  surrender  its  railways  to  private  ownership  and  management 
than  to  adopt  the  same  course  with  reference  to  its  highways 
or  the  streets  of  its  cities.  On  another  hand,  the  analogy  be- 
tween a  highway  or  a  street,  and  a  railway,  is  only  externally  and 
momentarily  apparent;  essential  distinctions  obliterate  any  but  super- 
ficial resemblance. 

The  various  forms  of  administrative  control,  tried  from  time  to  time, 
have  not  been  successful.  Mr.  Acworth  refers  to  the  limitation 
of  dividend,  sliding  scales,  periodic  revision  of  rates,  fixed  minimum 
rates,  and  other  suggestions  in  the  terms  of  Sir  Albert  Rollit^  as 
"dangerous  delusions"  which  to  many  minds  will  not  seem  ex- 
travagant.    Perhaps  the  greatest   volume   of   material   collected   and 

'  Address  as  President  of  the  Associated  Chambers  of  Commerce  at  Plymouth  cited  by  Acworth,  The  State 
in  relation  to  Railways.      A  Policy  of  Free  Exchange,  p.  195. 


272  Fiscal  Problems  Pt.  Ill 

classified  with  reference  to  railway  management,  is  that  of  the  cele- 
brated Italian  Commission^  which  sat  for  three  years  and  studied  the 
subject  in  all  forms,  in  every  country. 

The  final  conclusions  of  the  Commission  were  opposed  to  state  owner- 
ship or  control,  in  consideration  of  service  rendered,  expense,  and  polit- 
ical dangers  involved.  After  this  elaborate  report^  Italy  gave  up  state 
management  and  adopted  the  measures  suggested.  The  elusive  nature 
of  the  subject  is  shown  by  the  fact  that  Italy,  after  all  her  varied  reports 
and  experiences,  has  gone  round  in  a  ring,  as  it  were,  and  returned  to 
state  ownership;  and,  it  might  be  added,  seems  more  or  less  in  doubt 
with  reference  to  the  results. 

If,  however,  the  advisabiHty  and,  at  times,  necessity  of  a  certain 
amount  of  administrative  supervision  of  railways  is  recognized,  another 
prolific  field  of  discussion  is  opened.  Questions  occur  with  reference 
to  the  nature  of  such  supervision;  whether  it  should  be  vested  in  the 
legislative  assembly,  the  executive,  the  judiciary,  or  in  some  other 
authority,  or  combination  of  authorities. 

Again,  the  development  of  the  railway  in  different  countries  has 
been  due  to  different  causes,  and  carried  on  under  different  conditions; 
considerations  which  lead  into  new  and  more  confusing  quandries. 
In  certain  countries,  the  railway  has  preceded  the  needs  and  develop- 
ment of  the  community,  as  at  times  in  America;  or,  the  reverse  may  be 
the  case,  as  notably  in  England.  The  railway  in  other  countries  has 
grown  up  independently  of  plan  or  system,  as  in  Belgium;  or  may  be 
the  result  of  long  and  carefully  formulated  preparation,  as  in  France. 
The  history  of  railway  development  is,  in  fact,  almost  as  varied  as 
the  history  of  the  different  countries  in  which  the  development  has 
taken  place.  In  some  countries,  the  railway  has  been  created  and 
fostered  by  governments;  in  others,  developed  by  private  initiative  and 
capital;  in  some,  traceable  to  purely  industrial  causes;  in  others, 
largely  affected  by  speculation,  or  political  and  military  considerations. 
It  is  evident,  therefore,  that  railways,  starting  from  such  varied  origins, 
continued  under  such  different  influences,  and  presenting  such  baffling 
material  for  analysis,  evolve  different  conditions  for  study  wherever 
found. 

The  most  superficial  review  of  railway  methods  in  different  countries, 
reveals  essential  distinctions  in  many  or  all  cases;  distinctions  naturally 


*  Atli  delta  Comtnissione  d'Inchiesta  suU'Esercizio  delle  Ferrovie  Italiane,  1881.    An  interesting  summary 
of  this  report  will  be  fouad  in  President  Hadley's  luminous  work,  Railroad  Transportation,  Chapter  XII. 


Bk.  IV  Railways  273 

evolving  different  relations  between  the  railway  and  the  State.  These 
relations  may  be  broadly  divided  into  five  classes,  v/hich  Mr.  Acworth^ 
has  summarized  as  follows: 

(i)     The  State  may  both  own  and  work. 

(2)  It  may  own  and  not  work,  but  lease. 

(3)  It  may  work  without  owning. 

(4)  It  may  neither  own  nor  work,  but  merely  control, 
(s)     It  may  let  the  railways  alone  altogether. 

These  classifications  may  be  simplified  for  the  present  purpose: 

1.  Complete  state  ownership,  operation,  and  control. 

2.  Complete  private  ownership,  operation,  and  control. 

3.  Intermediate  conditions. 

The  relation  may  be  considered  of  a  direct  fiscal  system  to  State  and 
railway. 

I.  Railways  owned  and  controlled  by  the  State  present  no  difficulty. 
State  property  need  not  be  affected  by  changes  in  fiscal  methods.  A 
reduction  in  rates  might  be  expected,  having  a  possible  beneficial  effect 
upon  industries  coming  under  their  influence.  This  reduction  could 
occur  through  the  repeal  of  taxes  on  iron  and  steel,  and,  in  general,  of 
all  taxes  increasing  the  cost  of  extensions  and  running  expenses. 

II.  In  countries  in  which  railways  are  privately  owned  and  controlled, 
important  problems  are  presented.  On  one  hand,  great  national 
tansportation  systems,  representing  enormous  interests,  earning  powers, 
and  franchise  values,  are  dominated  by  individuals.  This  places  not 
only  the  control  of  volumes  of  socially  created  earnings  in  the  hands  of 
these  individuals,  but  throws  productive  industry  directly  under  their 
influence.  This  makes  it  possible  for  individuals  to  capitalize  and 
sell,  for  their  own  benefit,  wealth  created  by  the  society.  Through 
the  over-capitalization  and  dilution  of  earnings,  shipping  discrimina- 
tions and  so  on,  it  is  possible  to  wield  dangerous  power  over  the  economic 
life  of  a  people;  swelling  accumulations  in  one  direction,  while  stifling 
industrial  competition  and  general  values  in  another.  It  makes  it 
possible,  under  certain  conditions,  to  turn  a  national  transportation 
system  into  a  private  speculating  machine,  through  the  use  of  its  credit 
and  the  disposition  of  its  earnings.  By  means  of  over-capitalization, 
suppression,  or  declaration  of  dividends,  wrecking,  receiverships,  and 
reorganizations,  values  may  be  affected  almost  indefinitely  through 
control  of  transportation  organizations. 

'  The  State  in  Relation  to  Railways,  in  A  Policy  of  Free  Exchange,  p.  165. 


274  Fiscal  Problems  Pt.  Ill 

This  may  suggest  that  the  direct  and  full  assessment  of  railway 
franchises  could  but  prove  advantageous.  It  may  appear  that  such  a 
step,  together  with  the  necessary  publicity  involved,  would  act  as  a 
salutary  check  upon  rate  discrimination  and  railway  exploitation  in 
general.  Again,  it  might  be  said,  where  these  great  public  service 
franchises  are  made  the  object  of  administrative  fiscal  solicitude,  that 
capitalization  will  be  largely  limited  to  cost  of  construction  and  ex- 
tension, and,  consequently,  the  exploitation  of  a  society,  by  means  of  the 
manipulation  of  securities  issued  against  the  societies'  own  wealth, 
will  be  proportionately  checked.  These,  and  allied  considerations, 
suggest  that  the  absorption  of  social  wealth  controlled  by  individuals, 
in  the  form  of  railway's  franchises,  might  be  of  economic  advantage  to 
the  society  as  a  whole.  Unfortunately,  such  considerations  but  present 
a  single  side  of  the  questions  at  issue.  On  another  side  is  found  a 
vast  railway  system,  involved  in  an  incalculable  number  of  ways, 
throughout  the  vital  financial  interests  of  a  nation,  with  rates  influenced 
by  the  amount  of  socially  created  wealth  in  the  hands  of  corporations. 
Thus,  not  only  are  the  rates  and  activities  of  the  railway  influenced 
by  private  ownership,  but  the  railway's  securities  and  indebtedness  are 
concerned.  These,  again,  enter  into  every  financial  and  industrial 
channel  in  the  country  through  loans  and  investments  of  bank  and 
saving  institutions.  Securities  of  this  nature  present  sensitive  and 
fluctuating  values,  intimately  affected  by  taxation  in  many  ways. 
These  securities  affect,  not  the  railway  alone,  but  fiduciary  institutions, 
and  through  them  the  credit  and  industrial  basis  of  the  society.  To 
affect  the  value  of  railway  securities  adversely,  may  endanger  the  whole 
fabric  of  the  people's  industrial  existence. 

Looked  at  from  one  point  of  view,  the  subject  seems  clear  and  simple; 
from  another,  involved  in  impenetrable  clouds.  The  problem  is,  how 
to  reach  the  socially  created  wealth  in  the  hands  of  privately  owned  and 
controlled  railways;  to  withdraw  the  power  of  railway  exploitation  and 
discrimination  from  individuals,  and,  at  the  same  time,  neither  injure 
the  railway,  in  taxing  its  property  as  a  corporation,  nor  affect  its  securities. 
The  problem  may  present  hopeless  difficulties.  If  there  is  any  solution, 
however,  it  can  be  reached  but  through  the  constant  conservation  of 
the  railways'  interests  at  every  step,  and  in  the  elimination  of  all  danger- 
ous and  antagonistic  legislation.  The  problem  suggests  the  follov<ing 
general  considerations: 

Railways  and  railway  franchises    in  private  hands  are  at  present 


Bk.  IV  Railways  275 

taxed,  both  directly  and  indirectly.  The  amount  of  direct  taxation  is 
a  known  quantity;  this  amount,  instead  of  being  levied  upon  real  estate, 
rolling  stock,  securities,  and  improvements,  could  be  assessed  upon 
the  land  privileges  of  the  railway.  This  step  need  involve  no  disturb- 
ance. The  amount  of  indirect  taxation,  paid  by  the  railway,  might 
be  approximated  by  means  of  estimates  with  reference  to  its  con- 
sumption of  taxed  goods,  iron,  steel,  and  so  on.  With  the  gradual 
repeal  of  indirect  taxation,  this  amount  could  be  assessed  upon 
franchises  as  the  indirect  burdens  were  eliminated.  After  this 
transposition,  the  railway  would  be  paying  no  more  taxes  than 
at  first.  Here,  again,  no  difficulty  occurs.  In  questions  with  refer- 
ence to  amounts  or  estimates,  the  final  decision  may  nearly  always 
be  left  to  the  railway,  the  subject  being  of  but  temporary  interest  to 
the  society. 

If  all  taxes  paid  by  railways  are  to  be  concentrated  upon  land  privileges, 
the  value  of  these  privileges  should  next  be  estimated.  The  tax  already 
paid,  and  that  to  be  finally  assessed,  would  then  be  a  matter  of  simple 
calculation.  If  the  railway  were  paying  too  much,  the  diff'erence  could 
be  repealed;  if  not  enough,  a  certain  amount  would  remain  to  be  assessed. 
This  amount  is  a  known  quantity  and  could  be^assessed  in  the  following 
way.  A  period  of  time  could  be  selected,  as  far  as  possible  that  most 
convenient  for  the  railway.  The  total  amount  could  then  be  divided 
into  percentages,  also  to  suit  the  convenience  of  the  railway;  and  these, 
again,  paid  during  intermediate  periods;  once  more  as  far  as  possible 
in  accordance  with  the  railway's  decisions.  These  periods  and  per- 
centages cotdd  be  made  of  any  desired  length  or  amount,  and  should 
be  made  in  co-operation  with  the  railway;  step  by  step,  and,  within 
certain  limitations,  it  might  be  said,  as  the  railway  decided.  Temporary 
decisions  would  be  of  little  moment  to  the  society,  and  might  be  of 
vital  importance  to  the  railway. 

If  the  absorption  of  these  franchise  values  were  approached  in  this 
way,  that  is  with  every  effort  to  protect  and  benefit  the  railway  at 
every  step,  the  attempt  at  least  might  be  made  without  hopeless  failure 
at  the  outset.  Under  the  most  favourable  conditions,  however,  the 
process  would  involve  difficulties  which  should  never  be  overlooked, 
and  which  can  be  met  but  with  the  exhaustive  study  and  consideration 
of  every  problem  presented. 

III.  Conditions  intermediate  between  State  and  private  ownership 
require  no  lengthy  discussion.     The  preceding  considerations  might 


276  Fiscal  Problems  Pt.  Ill 

apply  to  State  or  private  interests,  as  the  property  fell  into  one  class 
or  the  other. 

A  few  general  considerations  may  be  hazarded,  subject  to  modification 
as  affected  by  specific  conditions.  Great  transportation  and  public 
service  systems,  in  private  control,  such  as  the  railways  of  England 
and  the  United  States,  represent  millions  of  security  values  owned 
by  the  people  at  large,  or  held  by  fiduciary  institutions,  against  which 
the  institutions  have  lent  the  savings  of  the  people.  The  control 
of  this  enormous  volume  of  wealth  lies  in  the  hands  of  the  few  men 
controlling  the  directorates  of  the  railways  and  the  institutions.  Where 
such  conditions  exist  under  a  protective  and  indirect  fiscal  system, 
the  properties  represented  may  be  taxed  and  bled  in  two  ways.  Every 
tax  on  iron  and  steel  will  absorb  a  portion  of  railway  earnings  and  depress 
railway  securities.  Every  possibility  of  the  use  of  corporate  credit,  may 
divert  another  portion  of  earnings  into  the  pockets  of  those  in  control. 
The  value  of  the  land  privilege  of  a  railway  will  depend  upon  rates  in 
relation  to  running  expenses.  With  existing,  or  productively  modified, 
schedules  of  rates,  it  is  not  impossible  that  untaxed  running  expenses 
might  increase  railway  earnings  under  a  direct  system.  If  taxes  on 
iron  and  steel  are  repealed  on  one  hand,  and  private  speculation  in 
railway  earnings  is  checked  on  another,  these  earnings  might  be  paid 
to  the  holders  of  the  securities  in  the  form  of  dividends  instead  of  to 
protected  interests  and  stock  manipulators  in  the  form  of  taxes  and 
privately  controlled  franchises.  Railway  paper  in  general  and  fiduciary 
institutions  might  thus  be  benefited.  This  would,  of  course,  depend 
upon  the  relations  established  between  land  privileges,  running  expenses, 
and  rates,  and  everything  should  be  done  to  support  railway  values  in 
such  relations. 

One  method  of  railway  control  has  never  been  attempted,  and  may 
be  mentioned,  as  of  possible  interest  in  a  direct  fiscal  system.  This 
method  is  the  administrative  application  of  the  holding  organiza- 
tion. By  means  of  such  an  organization  a  society,  through  its  admin- 
istration, might  control  its  transportation  system  without  the  expense 
and  danger  of  either  owning  or  operating.  This  might  be  done  without 
money  as  follows:  An  administration  could  create  a  holding  corpora- 
tion with  whatever  capitalization  was  necessary.  Interest  on  shares 
in  this  organization  could  be  guaranteed  at  a  conservative  rate.  These 
shares  would  then  possess  the  value  of  a  government  security,  and 
could  be  used  to  obtain  control  of  the  stock  of  the  chief  railways,  or 


Bk.  IV  Railways  277 

railway  holding  companies.  The  administration  need  not  be  embar- 
rassed through  the  issue  of  these  obligations;  control  of  rates  could  pro- 
duce the  funds  required.  An  organization  of  this  kind  might  be  of 
service  in  the  appHcation  of  direct  fiscal  methods  to  railways.  The 
creation  of  such  an  administrative  railway  holding  organization 
would  open  problems  of  appHcation  and  control,  requiring  long  and 
careful  study.  It  has  at  least  the  advantage  of  not  being  a  demon- 
strated failure  and  the  idea  may  not  be  unworthy  the  examination  of 
those  interested  in  administrative  problems. 


CHAPTER  III 

MONEY 

THE  relation  of  fiscal  and  monetary  systems  is  more  intimate 
than  that  of  any  other  economic  factors  under  administra- 
tive control.  Money  is  affected  by  taxation  and  reacts  upon  it 
in  two  ways:  First,  the  system  of  taxation  may  affect  the 
nature  and  volume  of  the  circulating  medium  through  the  taxation  of 
issues;  second,  as  taxes  are  paid  in  money,  the  entire  fiscal  sytem  is 
dependent  upon  the  nature  of  the  medium  in  which  the  taxes  are  paid. 
Thus,  money  presents  a  subject  wholly  exceptional  in  relation  to  revenue 
systems,  existing  or  suggested.  The  importance  of  this  relation  is  so 
great  that  it  leads  to  exceptional  consideration. 

The  repeal  of  a  tax  affecting  a  commodity,  if  intelligently  conceived 
and  executed,  may  have  no  effect  other  than  the  elimination  of  an  un- 
necessary burden.  The  repeal  of  a  tax  affecting  the  value  of  money 
might  be  the  exact  reverse,  certain  individuals  reaping  inordinate 
profits  contributed  by  the  people,  in  the  derangement  of  their  financial 
system.  This  relation  between  money  and  taxation  demands  that  the 
first  care  of  an  administration  should  be  to  insure  the  permanent  stability 
of  the  value  of  money.  Any  system  not  recognizing  this  can  work  little 
but  disaster.  The  repeal  of  taxes  affecting  the  issue  of  money,  or  influ- 
encing the  currency  in  any  way,  is  of  especial  significance  in  relation 
to  a  single,  direct  system.  Difficulty  is  here  met  of  which  no  adequate 
treatment  exists.  The  few  writers  who  touch  the  subject  usually 
limit  themselves  to  suggestions  of  certain,  ill-defined  advantages  of 
greater  "freedom"  in  banking  under  direct  methods.  That  the  word 
"freedom,"  used  in  juxtaposition  with  the  word  "banking,"  suggests 
some  vague  association  of  ideas  in  connexion  with  the  more  or  less 
clearly  understood  issue  of  paper  money,  is  not  unlikely;  and  any  treat- 
ment of  the  subject,  in  which  the  word  "freedom"  has  ever  so  slight 
a  share,  and  the  word  "banking"  is  left  in  a  mist,  may  well  render  it 
or  any  allied  policy  unworthy  further  examination. 

The  repeal  of  existing  taxes  affecting  money  would  leave  the  monetary 
system  of  the  country  in  a  nebulous  condition.    Such  a  condition  might 

278 


Bk.  IV  Money  279 

destroy  any  advantages  derived,  and  create  an  entirely  new  series  of 
industrial  and  financial  evils.  There  are  few  administrative  possibili- 
ties so  dangerous  as  ignorant  legislative  tampering  with  money. 

A  fiscal  system,  based  upon  ground-rent  as  a  single  source,  involves 
the  repeal  of  taxes  afi'ecting  money.  But  the  repeal  of  such  taxes  in- 
volves incalculable  results  and  may  be  disastrous.  How,  then,  may  this 
crux  be  met? 

Two  ways  suggest  themselves.  First,  the  fact  that  specific  taxes 
affect  the  medium  in  which  the  taxes  are  paid  leads  to  exceptional 
treatment  of  those  taxes.  If,  therefore,  a  society  reached  the  point 
of  basing  social  expenditure  on  social  wealth,  the  peculiarly  monetary 
taxes  could  be  sifted  from  others  —  and  continued  in  existence.  The 
taxes  affecting  money  are  nearly  always  restrictive,  and  could  thus 
preserve  the  various  forms  of  money  in  their  present  condition.  In 
this  way,  a  change  of  fiscal  methods  might  be  brought  about  without 
financial  disturbance  in  connexion  with  money.  This  is  one  way  of 
meeting  one  of  the  greatest  difficulties  with  which  the  single  land-tax 
would  have  to  cope.     A  second  way  is  as  follows: 

In  monetary  systems  the  chief  interest  centres  in  paper  issues,  as 
metallic  money,  short  of  flagrant  legislative  aberration,  takes  care  of 
itself.  The  number  of  systems  upon  which  the  issues  of  paper  money  may 
be  based  is  practically  infinite.  Jevons^  mentions  fourteen  classifica- 
tions any  one  of  which  may  be  used  singly,  or  in  combination  with  any 
or  all  others.  The  possible  unrestricted  combinations  of  fourteen 
numbers  may  be  calculated  and  an  extensive  series  reached;  the  only 
limit  apparently  to  the  possibilities  of  issuing  paper  money.  There 
is  thus  no  lack  of  material  upon  which  to  construct  monetary  systems; 
and,  with  such  a  wealth  of  opportunity,  it  is  not  remarkable  that 
many  writers  on  currency  problems  are  attacked  with  that  "dangerous 
kind  of  intellectual  vertigo"  to  which  Jevons  refers.^  The  extremes  of  this 
series  of  monetary  systems,  whatever  the  basis  of  its  construction, 
however,  will  be:  ist,  the  simple  deposit  method,  .  .  .  n'^  the  un- 
limited issue  of  irredeemable  paper  money.  All  possible  systems  of  issue 
will  be  contained  within  these  extremes,  inclusive. 

There  is,  however,  an  important  fact  to  be  observed.  Great  as  may 
be  the  number  of  systems  contained  within  the  series,  they  may  be 
traced  to  three  sources  of  monetary  value;  to  which  they  must  all 

"^  Money  and  the  Mechanism  of  Exchange,  pp.  217-220. 
'Ibid.,  p.  217. 


28o  Fiscal  Problems  Pt.  Ill 

eventually  be  referred,  singly  or  combined.  These  sources  are:  (i) 
Intrinsic  value;  (2)  Credit;  (3)  Legislation,  A  gold  coin  or  gold 
certificate,  representing  a  specific  deposit  of  gold  of  specific  fineness  is 
an  example  of  the  first.  Bank  notes  or  government  notes,  of  a  greater 
or  less  degree  of  convertibility,  may  present  examples  of  the  second. 
Notes  issued  against  revenue  payments,  paper  legal  tender,  or  in- 
convertible paper  money  in  various  forms,  may  present  examples  of 
the  third. 

Monetary  history  shows  that  a  people's  wealth  and  industry  are 
at  the  mercy  of  legislative  assembly  and  financier  largely  in  proportion 
to  the  extent  in  which  their  monetary  system  is  exposed  to  the  fluctuation 
of  credit  and  legislation.  The  simplest  and  most  stable  money  seems, 
therefore,  that  in  which  not  only  a  specific  quantity  of  gold  of  specific 
fineness  represents  the  monetary  unit,  but  one  from  the  foundations 
of  which  the  changing  influences  of  credit  and  legislation  have  been 
expelled:  In  other  words,  a  metallic  money  with  a  metallic  standard. 
A  monetary  system  of  this  nature  —  that  is,  one  in  which  neither  credit 
nor  legislation  has  any  share,  is  peculiarily  suited  to  a  single  direct, 
fiscal  policy.  A  money  based  upon  intrinsic  worth  is  a  natural  money, 
and  the  relation  of  a  natural  money  to  a  natural  fiscal  system  may  be 
briefly  noticed. 

There  are  certain  objections  to  metallic  money. 

1.  The  "inelasticity"  of  metallic  money;  its  amount  may  not  vary 
with  varying  needs. 

2.  Expense.  As  every  paper  certificate  requires  an  equivalent 
buUion  deposit,  interest  is  lost  which  might  be  gained  by  paper  issued 
in  excess  of  the  metallic  reserve. 

3.  A  metallic  money  may  form  an  insufficient  basis  for  the  volume 
of  Exchange. 

4.  A  metallic  money,  with  a  single  gold  standard,  fluctuates  with 
the  value  of  gold ;  and  consequently  forms  a  variable  medium. 

These  objections  may  be  discussed  in  order: 

I.  With  reference  to  the  relative  elasticity  of  paper  and  metallic 
money,  Professor  Walker^  says:  "We  have  seen  that  elasticity  is  also 
predicated  of  Incontrovertible  Paper  Money  by  its  advocates  and 
admirers,  but  upon  examination  we  found  that  there  is  no  elasticity 
whatever  in  such  a  money,  in  the  sense  of  its  giving  under  pressure 
to  resume  its  shape  after  pressure  is  withdrawn.    There  is  no  more 

•  Money,  p.  416. 


Bk.  IV  Money  281 

elasticity  in  a  circulating  medium  composed  of  incontrovertible  notes 
than  there  is  in  a  lump  of  dough,  which  may  be  pulled  out  to  any  length, 
at  least  until  it  breaks  apart,  but  never  flies  back  when  the  distending 
force  is  withdrawn. 

"But  is  there  elasticity,  in  any  proper  sense,  in  a  Convertible  Paper 
Money?  Those  who  demand  that  money  shall  be  '  elastic,'  mean  by 
this  that  there  shall  be  more  of  it  at  one  time  than  at  another.  Is 
this  elasticity?  A  rubber  band  is  elastic,  but  there  is  no  more  of  it 
at  one  time  than  at  another.  It  will  cover  more  ground  at  one  time 
than  at  another,  but,  it  only  does  so  by  becoming  thinner.  There 
will  be  more  of  it,  in  any  one  place,  at  one  time  than  at  another,  but, 
for  this  reason,  there  is  less  of  it  in  some  other  place.  There  is  no  more 
rubber  when  the  band  is  stretched  than  there  was  before.  Now, 
elasticity  in  this,  the  true  sense,  belongs  eminently  to  metallic  money. 
No  class  of  commodities  known  to  men  yield  more  quickly  under 
pressure,  or  react  more  promptly.  If  an  exceptional  demand  arises 
anywhere,  gold  or  silver  responds  with  an  alacrity  which  would  be 
unattainable  by  any  article  not  possessing  great  value  for  its  bulk, 
and  not,  at  the  same  time,  that  article  in  which  the  values  of  all  commodi- 
ties are  expressed  for  purposes  of  exchange." 

II.  A  money,  from  which  every  admixture  of  credit  and  legislation 
is  ejected,  and  which  rests  upon  intrinsic  bullion  value,  does  not  permit 
the  saving  of  interest  through  paper  issues  in  excess  of  the  bullion 
reserve.  This  fact,  in  the  opinion  of  some  writers,  causes  an  unnecessary 
expense  in  connexion  with  a  metallic  money.  That  such  expense  is 
in  any  sense  a  disadvantage,  in  comparison  with  the  gain  upon  another 
side,  is,  however,  not  admitted  by  many  whose  opinion  may  not  be 
lightly  disregarded.  The  attention  may  be  concentrated  upon  the 
inconvertible  bank  notes  of  France,  which  a  careful  administration 
has  long  maintained  at  par  with  gold;  upon  the  notes  of  the  Scottish 
banks,  at  times  preferred  by  the  people  to  metallic  money;  upon  the 
issues  of  the  Bank  of  England,  during  the  restriction;  or,  upon  other 
such  cases,  where  a  more  or  less  mixed  currency  seems  to  involve  no 
great  disadvantage.  The  history  of  money,  however,  presents  a  greater 
number  of  instances  in  which  more  or  less  allied  systems  have  created 
loss  so  great  that  any  saving  of  interest  becomes  of  slight  significance. 

The  volume  of  Exchange  in  proportion  to  the  amount  of  money 
displaced  is  immense.  The  circulating  medium  of  a  people  is  the 
foundation  of  this  great  superstructure.     The  financial  life  of  the  Deoole 


282  Fiscal  Problems  Pt.  Ill 

reposes  upon  the  monetary  system  of  the  country;  the  monetary  system, 
in  turn,  upon  what  there  is  of  real  value  beneath. 

Every  element  entering  into  these  foundations,  other  than  intrinsic 
worth,  weakens  them  proportionately.  Monetary  experiments  show 
that  economy  in  the  basis  of  a  monetary  system,  and  hence  in  the  basis 
of  the  industrial  and  financial  structure  of  the  society,  is  analogous  to 
economy  in  the  foundations  of  a  great  building.  The  building  may  appear 
externally  as  secure  without  proper  stone  and  cement  beneath;  it  may 
last  a  long  time,  under  favourable  conditions  with  insufficient  support ; 
but  the  cost  of  repair,  lack  of  confidence,  and  its  certain  collapse 
before  better  built  structures,  will  no  doubt  be  greater  than  the 
extra  original  outlay  required  by  solid  foundations. 

III.  The  insufficiency  of  metallic  money  may  not  seem  a  conclusive 
objection,  for  the  following  reasons.  First,  the  volume  of  exchange 
does  not  depend  upon  the  actual  quantity  of  money  existing  at  any 
moment  in  a  country;  credit  and  Clearing  House  transactions  render 
the  amount  of  business  done,  largely  independent  of  cash  actually 
changing  hands.  Speaking  of  the  ratio  of  cash  reserve  to  bank  deposits 
in  England,  Mr.  Walter  Bagehot^  says:  "So  far  from  our  being  able 
to  rely  on  the  proportional  magnitude  of  our  cash  in  hand,  the  amount 
of  that  cash  is  so  exceedingly  small  that  a  bystander  almost  trembles 
when  he  compares  its  minuteness  with  the  immensity  of  the  credit  which 
rests  upon  it."  The  Clearing  House  reduces  this  proportion  still  far- 
ther, doing  for  banking  institutions  what  the  latter  do  for  individuals. 
"When  it  is  said,"  says  Professor  Walker, 2  "that  the  annual  Clearing 
House  transactions  of  London  now  stand  at  or  above  £6,000,000,000 
while  those  of  New  York  are  even  greater,  the  importance  of  this  con- 
tribution to  the  economy  of  money  will  be  apparent." 

It  may  again  be  said  that  money  is  a  quantity  of  two  dimensions: 
volume,  and  speed  of  movement.  A  given  quantity  of  money  may 
perform  an  indefinitely  variable  amount  of  work;  moving  slowly  under 
certain  conditions,  and  more  rapidly  where  the  volume  of  exchange  is 
increased. 

Lastly,  it  may  be  said  that  a  metallic  money,  with  a  gold  unit  of  value, 
need  not  be  limited  by  a  fixed  quantity  of  gold.  When  money  is  limited 
to  a  single  metal,  the  control  of  that  metal  may  throw  a  dangerous 
lever  into  the  hands  of  the  banking  and  creditor  class.     The  alternate 


^Lombard  Street,  p.  18. 
*Moncy,  p.  69. 


Bk.  IV  Money  283 

contraction  and  release  of  the  currency,  especially  during  times  of  un- 
settled financial  conditions,  may  result  in  the  indefinite  absorption  of 
property  by  the  creditor  class.  A  purely  metallic  money  need  not  be 
subject  to  control  in  this  way.  Where  gold  alone  is  insufficient  to  meet 
the  demands  of  Exchange,  there  seems  to  be  no  reason  why  other  metals 
could  not  be  put  into  circulation  without  danger,  if  no  arbitrary  ratio 
is  fixed,  and  their  bullion  value  alone  is  recognized.  Gold  could  al- 
ways remain  the  unit,  whatever  metals  were  used.  A  difficulty  would 
occur  with  reference  to  fluctuation  in  metal  values.  Where  a  gold 
unit  is  adopted,  paper  based  upon  other  metals  would  simply  have 
to  pay  a  premium,  or  the  reverse,  as  determined  by  the  bulUon  values 
represented. 

IV.  There  are  two  reasons  why  objections  to  metallic  money,  with 
reference  to  its  variability,  do  not  seem  conclusive.  First,  experience 
recognizes  gold  as  the  most  satisfactory  of  mediums;  the  least  variable 
of  metals,  and  certainly  less  variable  than  any  combination  of  credit 
and  legislation.  Second,  it  may  be  said  that  there  is  a  method  by  means 
of  which  the  fluctuations  of  gold  might  be  reduced  to  a  minimum,  while 
reserving  the  advantages  of  a  metallic  money.  The  fact  that  a  specific 
quantity  of  gold  constitutes  the  monetary  unit  of  a  country  is  no  reason 
why  contracts  should  necessarily  be  expressed  in  that  unit.  The  fluctu- 
ations in  the  value  of  the  precious  metals  has  suggested  the  inquiry, 
whether  some  substitute  for  them  could  not  be  found  in  order  to  give 
greater  stability  to  payments  extending  over  a  long  period  of  time.  Such 
a  substitute  has  been  adopted  to  a  limited  extent  in  corn-rents,  and 
this  principle  has  long  been  in  practice  in  relative  degrees  in  different 
countries.  Locke  ^  advanced  this  idea  in  his  paper.  The  Value  of  Money. 
"  '  Wheat,  in  this  part  of  the  world,  and  that  grain  which  is  the  constant 
general  food  of  any  other  country,  is  the  fittest  measure  to  judge  of 
the  altered  value  of  things,  in  any  long  tract  of  time.'  Mr,  Horner,^ 
in  his  speech  during  the  bullion  debates,  declared  that  'Bread-corn 
is  the  paramount  and  real  standard  of  all  values.'" 

"We  are  forced  to  admit,"  says  Jevons,^  "that  the  statesmen  of 
Queen  Elizabeth  were  far-seeing  when  they  passed  the  Act  which  obliged 
the  colleges  of  Oxford,  Cambridge,  and  Eton,  to  lease  their  lands  for 
corn-rents.    The  result  has  been  to  make  these  colleges  far  richer  than 


'  Cited  by  Professor  Walker,  Money,  p.  139. 

» Ibid. 

^ Money  and  the  MethanUm  of  Exchange,  p.  326. 


284  Fiscal  Problems  Pt.  Ill 

they  would  otherwise  have  been,  the  rents  and  endowments  expressed 
in  money  having  sunk  to  a  fraction  of  their  ancient  value." 

These  considerations  suggest  the  multiple  legal  tender,  or  tabular 
standard  of  value.  Such  a  standard  would  represent  the  value  of  a 
specific  quantity  of  gold  at  a  certain  time,  expressed  in  standard  com- 
modities. A  multiple  standard  of  this  nature  might  give  a  stable 
monetary  unit,  which  could  be  used  for  deferred  or  long-standing  in- 
debtedness, such  as  interest  on  the  more  conservative  securities, 
trust  funds,  and  government  or  municipal  obligations.  The  subject 
is  favourably  discussed  by  Professor  Jevons.^  He  says:  "Such 
a  standard  would  add  a  wholly  new  degree  of  stability  to  social  rela- 
tions, securing  the  fixed  income  of  individuals  and  public  institutions 
from  the  depreciation  which  they  have  often  suffered.  Speculation 
too,  based  upon  the  frequent  oscillations  of  prices,  which  take  place 
in  the  present  state  of  commerce,  would  be  to  a  certain  extent  dis- 
couraged. The  calculations  of  merchants  would  be  less  frequently 
frustrated  by  causes  beyond  their  own  control,  and  many  bankruptcies 
would  be  prevented.  Periodical  collapses  of  credit  would  no  doubt 
recur  from  time  to  time,  but  the  intensity  of  the  crisis  would  be  mitigated 
because  as  prices  fell,  the  liabilities  of  debtors  would  decrease  approx- 
imately in  the  same  ratio." 

Owing  to  existing  conditions  it  may  seem  impossible  for  a  purely 
metallic  money  to  be  brought  into  existence  in  any  great  commercial 
nation  to-day.  It  may  appear  possible,  however,  by  means  of  uniform 
issues  and  the  strengthening  of  metallic  reserves,  to  improve  existing 
monetary  systems  and  to  place  them  proportionately  beyond  the  influ- 
ence of  the  legislative  assembly  and  the  financial  magnate. 

No  study  of  monetary  problems  could  be  better  concluded  than  with 
the  following  citation  from  the  pen  of  Professor  Jevons.  He  says,  in 
closing  his  work  on  Money  and  the  Mechanism  of  Exchange.^  "From 
all  the  above  considerations  it  follows  that  the  only  method  of  regulating 
the  amount  of  the  currency  is  to  leave  it  at  perfect  freedom  toj  regulate 
itself.  Money  must  find  its  own  level  like  water,  and  flow  in  and  out  of 
a  country,  according  to  fluctuations  of  commerce  which  no  government 
can  foresee  or  prevent."  .  .  .  Speaking  of  paper  issues  he  continues: 
"Private  issues  should  disappear  like  private  mints,  and  each  kingdom 
should  have  one  uniform  paper  circulation,  issued  from  a  single  central 

»  Ibid.,  p.  333. 
'  pp.  340,  34t. 


Bk.  IV  Money  285 

state  department,  more  resembling  a  mint  than  a  bank.  The  manner 
of  issuing  this  paper  currency  should  be  strictly  regulated  in  one  sense; 
the  paper  circulation  should  be  made  to  increase  and  diminish  with 
the  amount  of  gold  deposited  in  exchange  for  it.  At  the  same  time, 
no  thought  need  be  taken  about  the  amount  so  issued.  The  purpose 
of  the  strict  regulation  is  not  to  govern  the  amount,  but  to  leave  that 
amount  to  vary  according  to  the  natural  laws  of  supply  and  demand. 
In  my  opinion,  it  is  the  issue  of  paper  representative  notes,  accepted 
in  place  of  coin,  which  constitutes  an  arbitrary  interference  with  the 
natural  laws  governing  the  variations  of  a  purely  metallic  currency 
so  that  strict  legislative  control  in  one  way  leads  to  more  real  freedom 
in  another." 

These  considerations  may  be  briefly  summarized:  In  any  modi- 
fication of  present  fiscal  methods,  existing  monetary  systems  should  be 
preserved  with  the  greatest  care.  No  taxes  affecting  monetary  value 
should  be  repealed  until  the  money  of  the  country  has  been  established 
upon  a  basis  independent  of  the  influence  of  such  taxes.  If,  by  means  of 
uniform  issues  and  gradual  increase  of  metallic  reserves,  a  country 
could  develop  a  workable  system,  based  upon  bullion  values,  taxes 
affecting  monetary  issues  might  be  repealed  without  danger. 


CHAPTER  IV 

PROPERTY 

THE  absorption  of  ground-rents  by  society  is  criticized  as  sub- 
versive of  the  institution  of  private  property.  The  relation 
of  fiscal  systems  to  property  in  general  may,  therefore,  be 
suggested. 
Unimproved  land  is  rendered  valuable  because  of  the  existence  of 
society,  and  what  Adam  Smith  calls  the  good  government  of  the  sov- 
ereign, in  other  words,  the  expenditure  of  public  money  raised  by  taxa- 
tion. This  expenditure  of  public  funds  creates  a  certain  volume  of  annual 
wealth  represented  by  the  "powers  of  the  soil,"  advantages  of  situation 
and  natural  desirability  of  different  kinds.  Present  administrative 
methods  not  only  create  this  annual  wealth  through  use  of  the  social 
resources,  but  allow  it  to  accumulate  in  the  hands  of  individuals; 
present  methods,  therefore  seem  subversive  of  the  rights  of  society  to 
publicly  created  wealth. 

"The  total  expenditure  of  all  the  London  authorities ^  —  County, 
Poor-Law,  Sanitary,  Police,  Educational,  etc.  —  is,  according  to  the 
Government  Returns  for  1S94-5,  as  corrected  by  the  statistical  officer 
of  the  London  County  Council  {London  Statistics,  vol.  vii.,  pp.  xlv.  — 
Ixi.),  £12,876,922.  Of  this  only  £1,650,856  is  derived  from  rents  of 
public  property,  fees,  fines,  dues,  and  'sundry  other  sources.'  Grants 
in  aid  from  the  Imperial  Exchequer  provide  £1,666,159,  consisting  of 
the  education  grant  (£594,640)  —  grants  to  the  IMetropolitan  Police 
Commissioners  (£610,828),  Exchequer  grants  to  London  County  Council 
out  of  licences,  estate  duties,  and  Customs  and  Excise  (£460,557),  and 
a  small  grant  to  Poor-Law  authorities  (£134) .  This  leaves  the  enormous 
sum  of  £9,338,473  to  be  levied  locally  in  the  form  of  rates.  These 
three  items  —  grants  out  of  Imperial  taxation,  local  rents,  and  'other 
sources'  —  make  up,  for  the  year  under  consideration,  a  total  of  £12,- 
655,488. 

"  Of  course  Londoners  pay  not  only  the  whole  of  the  9  1-3  millions 
raised  in  rates,  but  also  their  due  proportion  of  the  imperial  taxation 

1  The  Great  Problem  of  our  Great  Towns,  reprinted  from  the  Echo,  pp.  15-16. 

286 


Bk.  IV  Property  287 

out  of  which  the  grants  of  about  i  2-3  milUons  are  made.     The  total 
amount  contributed  by  the  public  in  general  is,  therefore,  £11,004,632. 
"We  arrive,  therefore,  at  this  interesting  comparison: 

Per  annum 

London  land  values  (created  by  public)  say £16,000,000 

London's  expenses  (paid  by  public) 11,004,632 

''  The  people  of  London  pay,  directly  or  indirectly,  £11,000,000  a  year 
to  make  and  keep  the  land  valuable;  and  then  pay  £16,000,000  a  year 
to  the  landlords  because  it  is  valuable." 

These  methods  are  typical  of  existing  systems.  Societies  tax  them- 
selves in  order  to  continue  their  organized  existence.  This  existence 
together  with  the  expenditure  of  the  public  funds,  creates  great  annual 
values  belonging  peculiarly  to  the  society,  for  the  reason  that  they  are 
caused  by  social  activities.  Present  administrations  then  hand  a  large 
portion  of  this  social  wealth  over  to  the  ownership  and  control  of  indivi- 
duals. There  can  be  but  one  result,  a  result  analogous  to  that  created 
by  the  indirect  taxation  of  living  expenses;  namely,  the  pro- 
gressive accumulation  of  socially  created  wealth  in  the  hands  of 
the  richer  members  of  the  society.  The  present  administrative 
system,  therefore,  seems  subversive  of  the  rights  of  property,  so 
far  as  public  property  is  concerned,  in  denying  to  society  the  wealth 
society  creates. 

How  the  present  system  destroys  and  undermines  the  right  of 
individual  property,  in  the  form  of  wages  and  the  smaller  incomes, 
throughout  all  societies  based  upon  the  taxation  of  living  expenses,  has 
been  shown.  ^  The  existent  system  seems  destructive  of  individual 
property  rights  in  other  ways.  The  expenditure  of  public  funds  creates 
rental  values.  The  absorption  by  individuals  of  these  ground-rents, 
created  by  the  population  on  one  hand,  and  paid  by  the  same  pop- 
ulation on  another,  undermines  property  rights  in  incomes  and  wages 
swelling  ground-rents  in  large  cities. 

Rural  districts  present  analogous  conditions.  The  agricultural 
labourer  is  held  from  the  soil  by  means  of  legislation  with  reference  to 
land  and  the  indirect  taxation  of  his  wages.  In  England,  especially, 
the  time,  capital,  and  labour  expended  upon  the  cultivation  of  the  soil 
seem  largely  at  the  mercy  of  the  owner  or  lessee  of  the  land.  This 
influence  does  not  stop  here,  however.  Through  the  power  of  expelling 
the  labourer  from  the  cottage  or  allotment,  freedom  of  opinion  and 

'  Cf.,  pp  256,  261. 


288  Fiscal  Problems  Pt.  Ill 

political  discussion  may  be  stifled.  The  following  is  cited  from  the 
Report  of  the  Proceedings  oj  the  Rural  Reform  Conference.  ^ 

Mr.  William  Weston  (Wisbech  Division  of  Cambridgeshire):  "I 
stand  before  you  a  workingman  hailing  from  the  Northern  or  Wisbech 
Division  of  Cambridgeshire,  and  I  am  here  to-day  to  represent  the 
workingmen.  Their  great  request  was  that  I  should  put  before  the 
Conference  the  Allotment  Question.  That  is  a  question  that  is  nearest 
to  the  heart  of  every  workingman  in  our  village.  We  have  failed 
already  to  get  our  land  by  Acts  that  have  been  passed  before,  but  we 
have  in  our  villages  at  the  present  time  some  land  under  the  Voluntary 
system.  But  I  wish  to  let  this  Conference  know  that  this  Voluntary 
system  is  likely  to  prove  a  failure.  I  may  tell  you  that  where  I  live 
we  have  sixteen  allotments,  and  when  a  question  cropped  up  between 
us  and  one  of  the  landlords,  he  threatened  to  expel  us  next  Michaelmas 
at  one  month's  notice.  Now,  I  ask  this  Conference  and  any  agricultural 
labourers  the  question:  Can  rural  labourers  in  this  or  any  other  country, 
farm  under  a  system  like  that?  What  we  want,  gentlemen,  and  what 
we  mean  to  have,  is  fixity  of  tenure.  Our  workingmen  have  had  this 
land  for  some  years,  which  was  full  of  twitch,  and  though  they  cleared  it 
and  manured  it  and  cultivated  it,  still  they  are  threatened  to  be  expelled, 
next  Michaelmas,  and  they  say,  'We  cannot  go  on  without  food,  manure, 
etc.  What  is  to  be  done?'.  .  .  On  the  nth  of  September  they  can 
give  us  notice,  and  on  the  i  ith  of  October  we  have  to  quit  our  allotm.ents 
without  any  compensation." 

The  following  are  extracts  from  the  remarks  of  Mr.  Hines^  (Mid- 
Oxfordshire):  "Now,  what  I  want  to  impress  upon  you  is  this — what- 
ever you  do,  make  an  appeal  to  every  candidate  that  comes  before  the 
constituency  of  which  you  are  a  member,  and  impress  upon  their  minds 
the  necessity  of  making  an  alteration  in  the  tenancy  of  the  cottagers 
in  this  country.  My  friend,  Joseph  Arch,  I  see  by  reading  this  paper 
which  I  have  been  reading,  has  brought  forward  a  movement  to  the 
effect  that  the  labourers  shall  not  be  evicted  from  their  cottages  with 
less  than  six  months'  notice.  My  friends,  I  go  further  than  this  myself, 
and  I  think  the  scheme  originated  with  me,  as  far  as  South  Oxfordshire 
and  North  Buckinghamshire  was  concerned,  that  no  power  in  existence, 
either  landlord,  land  agent,  or  house  farmer  should  have  the  power  to 

*  The  Condition  of  the  Rural  Population.  A  Verbatim  Report  of  the  Proceedings  of  the  Rural  ReformCon- 
ference,  held  at  the  Memorial  Ilall,  Farringdon  Street,  December  loth,  i8gi,  under  the  Auspices  of  the  National 
Liberal  Federation,  p.  43. 

» Ibid.,  pp.  49-50. 


Bk.  IV  Property  289 

turn  the  agricultural  labourer  adrift  with  less  than  twelve  months' 
notice.  .  .  .  What  do  I  find  when  I  go  out  into  North  Worcester- 
shire? I  find  agricultural  labourers  come  to  me  one  after  another  and 
say:  'We  could  put  up  with  this  village;  we  could  put  up  with  the 
wages  and  with  the  allotments  of  this  village,  but  the  way  in  which  w^e 
are  put  into  cottages,  and  forced  to  rent  under  a  farmer  makes  the  places 
like  gaols.'  Hundreds  of  times  the  labourers  have  come  to  me,  when 
I  have  been  trying  to  organise  them,  and  to  persuade  them  to  join  the 
Agricultural  Labourers'  Union,  and  they  have  said  'We  would  join  the 
Union,  and  it  is  our  wish  to  join  the  Union,  but  though  we  are  not 
afraid  of  being  discharged  from  our  employment,  we  are  afraid  of  being 
evicted  from  our  cottages  and  turned  adrift' ;  and  all  of  you  know  what 
eviction  from  the  cottages  means." 

The  profitable  working  of  the  soU  is  dependent  upon  a  degree  of 
permanency  of  tenure.  Where  this  is  endangered,  the  time,  labour, 
and  capital  expended  are  endangered  to  an  equivalent  extent;  and 
where  rent  and  rates  can  be  raised  owing  to  improvements,  the  prop- 
erty represented  by  improvements  is  proportionately  endangered. 

One  more  citation  may  be  presented  from  this  collection.  ISIr.  C.  H. 
Cardell,^  C.  C.  (Launceston  Di\'ision  of  Cornwall)  says:  "What  is  the 
first  cry  of  the  agricultural  labourer  when  he  gets  his  allotment?  It 
is  for  security  for  improvements  and  security  of  tenure.  Bear  in  mind 
that  that  security  of  tenure  in  their  case,  important  as  it  is,  is  not  so 
important  as  it  is  in  the  case  of  the  tenant-farmer,  because  a  tenant- 
farmer  has  his  all  staked  in  his  occupation,  but  the  occupation  of  an 
allotment  gives  the  allotment  holder  but  a  partial  source  of  income. 

"The  question  has  been  referred  to  in  regard  to  the  crowding  of 
our  population  from  the  country  districts  into  the  tow^ns.  What  is  the 
cause  of  this?  It  is  because  good  culture  is  a  penal  thing.  Good  culture 
is  to-day  absolutely  illegal.  Let  any  man  try  it,  and  he  will  find  that 
the  capital  once  placed  in  the  soil  is  as  absolutely  confiscated  as  though 
they  had  smuggled  it.  I  say  that  as  soon  as  a  man  has  a  thousand 
pounds  in  his  pocket,  the  Army,  the  Navy,  and  the  whole  Constitution 
defend  him  in  his  right  to  it,  but  the  very  moment  he  places  these  coins 
in  soil,  he  loses,  before  any  tribunal  in  the  land,  every  particle  of  right 
to  it.  Under  those  circumstances  how  can  it  be  that  agriculture  should 
flourish?  The  gentleman  who  spoke  just  now  said  it  was  a  monstrous 
thing  that  so  many  farms  should  be  merged  into  one,  and  that  the  popu- 

'  Ibid.,  p.  S9- 


290  Fiscal  Problems  Pt.  Ill 

lation  should  be  disappearing.  Why  is  it?  It  is  because  bad  culture  is 
the  only  legal  culture,  because  good  culture  has  no  security,  in  spite  of 
all  the  Agricultural  Holdings  Acts  that  have  been  passed.  A  gentleman 
who  was  certainly  not  prejudiced,  in  bearing  testimony  against  this 
Act,  said  the  other  day  in  Norfolk  that  300  exchanges  has  taken  place 
in  the  county,  and  only  two  of  those  exchanges  had  taken  placed  under 
the  Act.     And  why?     Because  it  is  a  dead  letter. 

"Gentleman,  the  time  is  coming  when  these  things  must  be  altered. 
The  old  proverb  used  to  state,  'That  which  could  not  be  cured  must 
be  endured.'  But  that  old  proverb  has  been  misread,  and  now  it  is, 
'What  can't  be  endured  must  be  cured.'  Gentlemen,  our  land-owners 
and  our  legislators  would  do  well  to  take  note  of  the  proposals  and 
revolutionary  ideas  which  are  flooding  this  country  —  ideas  which  I 
cannot  go  with  altogether  myself.  But  why  are  these  measures  being 
proposed?  It  is  because  of  the  breakdown  of  the  present  system  of 
ownership,  because  the  tenant  farmers  of  England  to-day  dare  not  put 
their  energy,  and  enterprise  and  capital  into  the  soil,  and  that  the 
minimum  system  of  production  is  the  only  system  under  which  we  are 
authorised  to  proceed.  In  the  county  from  which  I  hail,  in  the  last  20 
years  we  have  decreased  something  like  40,000  in  population.  Those 
40,000  people  have  gone  principally  from  agriculture.  And  what 
is  the  reason?  People  will  not  realise  that  it  is  because  of  the  absolute 
insecurity  of  the  tenant's  capital,  and  that  therefore  the  culture  has 
gone  out  of  the  country." 

Such  conditions  lead  to  the  conclusion  that  present  systems  of  land 
tenure  are  largely  subversive  of  property  rights,  represented  in  capital 
and  labour  invested  in  the  direct  culture  and  improvement  of  the  soil. 
Property  of  this  kind  is  attacked  at  present  with  the  familiar  results 
of  urban  overcrowding  and  agricultural  destitution.  An  incident  cited 
in  the  Reminiscences  of  Sir  Edward  Russell  ^  shows  how  far-reaching 
and  pervasive  is  this  attack  on  private  property.  "Her  Majesty, 
the  Queen,  when  staying  in  one  of  her  country  residences,  had  upon  a 
visit  a  gentleman  of  high  situation,  to  whom  on  one  occasion  she  said, 
when  speaking  of  the  neighbourhood:  'I  don't  like  the s  (re- 
ferring to  a  landed  family  in  the  neighbourhood).  'Why,  ma'am?' 
asked  the  gentleman.  'Oh!'  answered  the  Queen,  'because  they  are 
very  had  to  their  tenants,  and  many  of  their  cottages  are  in  a  horrid  state, 
and  if  anything  is  done  by  any  tenant  at  their  own  expense  to  improve 

'  Quoted  from  Taxation  Reform,  by  F.  D.  Perrott.  p.  14.] 


Bk.  IV  Property  291 

their  condition,  the  first  thing  the s  do  is  to  raise  the  rent 

upon  them.  The  gentleman  courteously  replied:  'Well,  I  am  only  glad, 
ma  'am,  that  you  sympathise  with  the  aflQictions  of  the  tenants.'  Where- 
upon the  Queen  said:  *0h,  I  am  a  tenant  myself  from  Mr. of 

,  and  I  have  made  many  improvements,  and  every  time  I 

have  made  an  improvement  my  rent  has  been  raised." 

"Building  is  at  present  penalized,"  says  the  Right  Honourable  Charles 
Booth.  1  "A  property  in  section  (A)  is  perhaps  old  and  out  of  repair, 
but  if  the  owner  should  rebuild  and  by  so  doing  increase  its  annual  value 
say,  from  £300  to  £600,  the  occupier,  would  on  the  system  now  in  use, 
have  to  pay  not  only  this  additional  rent,  but  also  double  the  amount 
of  the  former  rates." 

These  considerations  refer  to  English  systems  of  land  tenure.  In 
the  essential  feature  of  the  subject,  however,  they  seem  suflficiently 
typical  to  permit  the  following  generalizations:  (i)  The  expenditure 
of  public  funds,  and  the  existence  of  society,  create  and  increase  a 
volume  of  annual  wealth  represented  in  ground-rents,  franchises,  mineral 
privileges,  and  so  forth.  This  property,  created  by  society,  belongs  to 
society  in  equity  and  right  reason.  The  present  system,  in  permitting 
this  wealth  to  remain  largely  in  private  possession  and  control,  destroys 
the  right  of  society  to  property  created  by  and  belonging  to  it.  (2) 
Owing  to  the  existing  insecurity  of  the  property  rights  of  tenants,  the 
progressively  cumulative  burdens  laid  upon  smaller  incomes,  through 
the  taxation  of  Uving  expenses,  together  with  opportunities  of  financial 
manipulation  which  these  taxes  create,  the  property  of  the  tenant  and 
poorer  classes  is  eflfectively  "  attacked  "  by  existing  administrations. 

The  insecurity  of  property  due  to  these  indirect  methods  is  the  fun- 
damental objection  to  existing  fiscal  and  administrative  systems.  Prop- 
erty can  never  be  secure  under  a  system  based  upon  the  taxation  of  vital 
needs  for  protective  purposes  and  fiscal  burdens  laid  in  proportion  to 
necessary  living  expenses.  Every  day  such  a  system,  continues  in 
existence  but  destroys  and  distorts  the  circulation  of  the  people's 
wealth,  concentrates  it  in  this  channel  or  that,  and  destroys  the  property 
rights  of  the  bulk  of  the  population  in  wealth  which  it  creates. 

A  direct  fiscal  system,  based  on  social  wealth,  does  not  seem  open  to 
these  objections.  Properly  understood  and  properly  administered, 
such  a  system  would  absorb  for  social  needs  only  that  property  created 
by  the  society,  and  allow  the  individual  undisturbed  possession  of 

1  Life  and  Labour  of  the  People  of  London,  Final  Vol.,  p.  195. 


292 


Fiscal  Problems  Pt.  Ill 


property  due  to  his  own  exertions.  At  the  same  time,  it  would  take  it 
largely,  if  not  entirely,  out  of  the  power  of  the  individual  to  exploit 
the  resources  of  a  society  for  his  own  gain,  through  the  control  of 
values  created  by  fiscal  and  administrative  decisions.  Such  a  system 
would  be  based  fundamentally  upon  property,  in  particular  and  in 
general.  Such  a  system  would  give  to  the  individual  that  which 
belonged  to  the  individual,  to  the  society  that  which  belonged  to  the 
society  —  it  would  render  unto  Caesar  that  which  was  Caesar's. 


CHAPTER  V 

NATURAL  ECONOMICS 

"HAT  is  the   natural   process   of   the   distribution   wealth 
with  reference  to  the  derivation  of  social  revenue? 

Social  revenue  should  evidently  be  derived  from  the  an- 
nual revenue  of  the  entire  people.  In  what  then  does  the 
total  gross  revenue  of  the  people  consist?  How  may  it  be  reached? 
To  what  extent  should  it  be  apportioned  to  social  needs,  and  how  may 
that  portion  be  absorbed  by  society,  without  affecting  the  productive 
capacity  of  individuals? 

The  various  systems  of  industrial  activity  are  carried  on  through 
the  agency  of  two  distinct  industrial  groups  which  might  be  called 
the  directly  and  indirectly  productive.  Both  groups  vai.\  be  productive 
in  a  general  sense,  but  a  distinction  may  be  made  between  the  two  forms 
of  production.  The  first,  or  directly  productive  group,  will  include 
those  members  of  the  society  whose  interests  are  concerned  with  the 
direct  exploitation  of  the  resources  of  the  earth;  the  second,  or  indi- 
rectly productive,  those  devoted  to  the  modification,  or  preparation 
for  consumption,  of  the  crude  material  actually  produced  by  the 
first  group.  The  distinction  between  the  two  forms  of  industry  may  be 
illustrated  by  a  comparison  of  the  occupations  of  the  farmer  and  the 
miller;  the  farmer  produces  the  grain,  the  miller  prepares  it  for  consump- 
tion. Again,  the  miner  extracts  from  the  earth  the  crude  ores  rendered 
available  only  after  passing  through  the  hands  of  the  smelter  and  the 
metallurgist;  the  railway  and  transportation  interests  distributing  it 
throughout  the  society.  The  distinction  between  the  two  forms  of 
production  is  evident  upon  a  moment's  reflection;  and,  for  the  sake  of 
convenience,  they  may  be  styled  productive  and  manufacturing;  the 
first  is  devoted  to  the  direct  production  of  raw  material,  the  second  to 
its  subsequent  modification  or  distribution. 

The  gross  revenue  of  a  people,  in  its  original  form,  consists  in  that 
mass  of  crude  material  annually  brought  into  existence  by  the  activities 
of  the  directly  productive  members  of  the  society.  All  the  material 
wealth  a  people  can  possess  must  be  contained  in  some  form  within 

293 


294  Fiscal  Jr'robiems  Pt.  Ill 

this  annual  volume  of  raw  production.  The  question  then  is  one  of 
distribution.  How  should  this  total  gross  revenue  of  society  be  dis- 
tributed to  the  individual  units? 

In  order  to  approach  the  subject  more  definitely,  let  it  be  supposed 
that  all  the  fruits  and  harvests  of  the  earth,  the  products  of  the  mine, 
the  field,  the  vineyard,  and  the  chase,  lay  before  a  single  arbiter  for 
distribution,  as  the  different  classes  of  the  people  present  their  claims 
and  receive  their  shares. 

The  directly  productive  class  would  naturally  be  the  first  considered, 
for  the  total  gross  revenue  is  due  to  its  industry.  But  before  it  receives 
its  share  it  will  be  found  that  this  class  separates  itself  into  three  distinct 
subdivisions:  (i)  the  class  of  labourers,  or  wage  workers;  (2)  that 
of  employers,  or  organizers  of  labour;     (3)  land-owners. 

Those  to  whom  the  first  distribution  should  be  made  would  perhaps 
be  the  labouring,  or  wage-working,  class  and  their  claims  may  be  heard 
first.  On  reflection,  however,  these  claims  seem  established,  as  agreed 
upon  with  the  employing  class.  That  portion  of  the  gross  social  prod- 
uce which  belongs  to  the  labouring  class  has  already  been  fixed,  in  the 
amount  of  wages  agreed  upon.  To  the  wage-working  class,  therefore, 
may  be  given  a  portion  of  the  total  produce  equal  to  the  value  of  Wages. 

The  employing,  or  capitalist,  class  is  next  in  turn.  To  this  class,  it 
is  evident,  belongs  that  portion  of  the  total  revenue  representing  the 
risk,  skill,  ability,  and  capital  contributed  by  its  members  to  general 
production.  To  this  class,  then,  belongs  that  share  of  the  total 
wealth  represented  by  Profits. 

After  these  returns  have  been  made,  the  proprietor,  or  land-owning 
class  will  naturally  lay  claim  to  the  remainder  of  the  total  social  revenue. 
That  the  remainder  of  the  revenue  belongs  to  the  land-owning  class  in 
return  for  the  use  of  their  land,  and  the  improvements  thereon,  may  not 
appear  unnatural;  and  the  entire  remainder  of  the  revenue,  after  Wages 
and  Profits  are  deducted,  may  be  handed  over  to  the  land-owning  class 
in  the  form  of  Rent.  In  this  way,  the  total  gross  revenue  of  the  society 
will  be  distributed. 

If  the  manufacturing  class  asks  in  what  way  its  revenue  is  to  be  derived, 
it  may  be  pointed  out,  that  while  the  whole  revenue  has  already  been 
distributed,  it  is  yet  in  its  crude,  or  unavailable,  form.  Before  it  can 
be  of  use  it  must  be  handed  over  to  the  manufacturing  class  to  be  pre- 
pared for  consumption;  during  this  process,  the  proper  share  will  natur- 
ally be  contributed  to  the  members  of  this  class  in  return  for  its  industry. 


Bk.  IV  Natural  Economics  295 

In  this  way,  the  gross  revenue  of  the  society  will  apparently  be  divided 
justly  and  satisfactorily  to  all  concerned,  and  all  might  be  well  if,  at 
this  juncture,  another  class  did  not  put  in  an  appearance  and  request 
to  be  pro\dded  with  its  share  of  the  annual  revenue.  This  class 
represents  a  subdivision  of  the  mdirectly  productive  class,  but,  as 
its  members  are  not  occupied  in  industry  or  transportation,  how  may 
these  demands  be  met?  This  class  represents  the  administrative 
members  of  the  society;  through  their  occupations,  the  society  has 
been  assured  of  the  order  and  security  necessary  to  production  and  it 
is  essential  that  it  should  receive  its  reward. 

But  whence  shall  this  reward  be  derived,  and  in  what  proportion? 
To  all  other  classes  of  the  people  seemed  to  belong  an  established,  and 
naturally  regulated,  portion  of  the  total  wealth;  here  alone  difficulty 
occurs,  after  the  total  wealth  had  apparently  been  justly  distributed. 
It  is  evident  that  the  administrative  class  is  not  industrially  productive, 
either  directly  or  indirectly;  its  reward,  therefore,  must  come  from  the 
results  of  the  activities  of  the  directly  productive  class.  But  how  and 
in  what  proportion? 

This  is,  perhaps,  the  most  pregnant  question  in  political  and  economic 
inquiry.  Upon  the  answer  will  depend  the  fiscal  and  financial  history 
of  the  resulting  society. 

If  administrative  expenses  are  withdrawn  from  the  wages  of  the 
workers,  an  unjust  burden  will  be  laid  upon  their  strength  and  vitality, 
their  productive  and  consuming  powers  will  be  affected,  and  the  total 
product  of  the  society  diminished. 

If  the  expense  of  adminstration  is  withdrawn  from  the  profits  of  the 
capitalist  or  employing  class,  an  unjust  burden  will  be  laid  upon  em- 
ployment and  industry,  and  the  productive  power  of  this  class  pro- 
portionately checked. 

There  remains  that  portion  of  gross  revenue  handed  over  to  the  land- 
owning class,  after  the  deduction  of  wages  and  profits.  The  functions 
of  the  land-owner,  as  a  member  of  the  directly  productive  class,  are  two- 
fold: first,  he  must  put  his  land  in  a  productive  condition;  second,  he 
must  maintain  that  condition.  Production  depends  upon  the  first, 
its  continuance  upon  the  second.  It  is  essential,  therefore,  to  the  most 
effective  production,  that  the  improvements  of  the  land-owner  should 
be  untaxed.  To  withdraw  administrative  expenses  from  the  annual 
value  of  these  improvements  places  an  unjust  burden  upon  improve- 
ment rent  and  checks  proportionately  the  most  productive  of  occu- 


296  Fiscal  Problems  Pt.  Ill 

pations  —  the  direct  development  of  land.  The  revenue  of  the  land- 
lord, therefore,  or  total  rent,  may  be  divided  into  three  portions:  (i) 
The  rent  of  improvements;  (2)  profits;  (3)  a  portion  representing 
neither  rent,  improvements,  nor  profits  necessary  for  their  mainte- 
nance. 

A  certain  portion  of  the  landlord's  capital  must  be  spent  in  the  de- 
velopment of  his  land,  in  order  to  put  it  in  a  productive  condition. 
Such  expenditure  must  be  profitable,  or  it  will  cease  and  production  be 
proportionately  checked.  Again,  there  must  be  a  portion  of  total  rent, 
represented  neither  by  improvements  nor  profits,  necessary  for  their 
maintenance.  Were  this  not  so,  it  might  be  asked  to  what  is  to  be, 
traced  the  rental  value  of  an  unimproved  city  lot.  No  capital  has  been 
spent  on  improvements,  no  profits,  consequently,  can  be  expected 
from  them;  yet  such  values  may  not  only  be  great,  but  increase 
without  the  expenditure  of  individual  capital. 

A  portion  of  the  gross  social  income  apparently  remains,  therefore, 
in  possession  of  the  land-owning  class,  due  neither  to  its  expenditure 
on  improvements  nor  profits  essential  to  their  maintenance.  It  may 
thus  seem  that  this  portion  of  the  total  gross  revenue  will  be  the  best 
from  which  to  derive  administrative  expenses:  First,  because  revenue 
derived  from  this  source  would  not  be  a  check  on  the  rewards  of  pro- 
duction, as  represented  in  wages,  profits,  or  improvement  rents;  second, 
because  in  deriving  administrative  expenses  from  this  source,  no  burden 
is  placed  on  any  class  as  a  productive  factor.  The  burden,  on  the  con- 
trary, is  borne  by  society  as  a  whole,  after  each  class  has  received 
just  renumeration  for  its  productive  activities.  These  considerations 
suggest  that  that  portion  of  gross  revenue  best  reserved  for  admin- 
istrative expenditure  is  that  represented  by  the  annual  value  of  the 
undeveloped  powers  of  the  earth  in  control  of  the  land-owning  class. 

The  foregoing  passages  contain  a  brief  statement  of  the  position 
developed  by  those  inquirers  in  France  known  as  the  Physiocrates, 
or  (Economistes.  Their  views  will  be  found  elaborated  in  the  works 
of  Quesnay,  Dupont  de  Nemours,  Mercier  de  La  Riviere,  I'abbe  Baudeau- 
and  others.  These  views  had  at  one  time  some  influence,  and 
during  the  early  revolutionary  period  were  partly  put  into  practice. 
Arthur  Young  made  his  celebrated  journey  through  France  at  that 
time,  and  was  interested  in  all  political  and  administrative  questions 
of  the  day.     He  had  found  a  property  in  the  Bourbonnais,^  at  Villeneuve 

•  Young's  Travels  in  France,  p.  231. 


Bk.  IV  Natural  Economics  297 

sur-Allier  near  Moulins,  which  he  was  anxious  to  buy.  He  was  one 
of  the  best  informed  agriculturists  of  his  day,  a  man  whose  chief  char- 
acteristics were  sterling  good  sense  and  an  honest  love  of  the  land. 
In  the  range  of  economic  literature,  therefore,  there  is  probably  no 
opinion  with  reference  to  the  applications  of  the  Physiocratic  land-tax 
of  greater  interest  than  that  of  Arthur  Young.  He  was  not  only  an 
informed  inquirer;  as  an  Englishman  uninfluenced  by  political  passions, 
but  directly  interested  in  the  application  of  this  tax.     He  says:* 

"The  impossibility  of  levying  the  (Economistes  land-tax  is  found  in 
France  to  be  as  great  in  practice  as  the  principles  of  it  were  absurd  in 
theory.  I  am  informed  (February,  1792),  that  the  confusion  arising 
from  this  cause,  in  almost  every  part  of  the  kingdom,  is  great.  The 
tax  of  300  millions,  laid  on  the  rental  of  France,  would  not  be  more  than 
2S.  6d.  in  the  pound;  too  great  a  burden  on  just  political  principles, 
but  not  a  very  oppressive  one  had  it  been  once  fairly  assessed,  and 
never  afterward  varied.  But,  by  pursuing  the  jargon  of  the  produit 
net,  and  making  it  variable,  instead  of  fixed,  every  species  of  incon- 
venience and  uncertainty  has  arisen.  The  assembly  divided  the  total 
among  the  departments;  the  departments  the  quotas  among  the  dis- 
tricts; the  districts  among  the  municipalities;  and  the  municipalities 
assembled  for  the  assessment  of  individuals:  the  same  decree  that  fixed 
the  tax  at  300  millions,  limited  it  also  not  to  exceed  one-fifth  of  the 
produit  net;  every  man  had  therefore  a  power  to  reject  any  assessment 
that  exceeded  that  proportion;  the  consequence  was,  the  total  assigned 
to  the  municipalities,  was  scarcely  anywhere  to  be  found,  but  upon 
large  farms,  let  at  a  money-rent  in  the  north  of  France;  among  the 
small  proprietors  of  a  few  acres,  which  spread  over  so  large  a  part  of 
the  kingdom,  they  all  screened  themselves  under  definitions,  of  what 
the  produit  net  meant;  and  the  result  was,  that  the  month  of  December, 
which  ought  to  have  produced  40  millions,  really  produced  but  14. 
So  practical  has  this  visionary  nonsense  of  the  produit  net  proved, 
under  the  dispensations  of  a  mere  democracy,  though  acting  nominally 
by  representatives.  .  .  .  The  people,  without  property,  have  a 
direct  interest  in  seconding  the  refusals  of  others  to  pay,  that  are  in 
the  lowest  classes  of  property,  and  who  can  really  ill  afford  it;  one  great 
objection  to  all  land-taxes,  where  possessions  are  much  divided.  With 
power  in  such  hands,  the  refusal  is  effective,  and  the  national  treasury 
is  empty.    But  supposing  such   enormous  difl&culties   overcome,  and 

*  Ibid.,  p.  349. 


298  Fiscal  Problems  Pt.  Ill 

these  little  properties  valued  and  taxed  on  some  practicable  plan,  from 
that  moment  there  must  be  a  new  valuation  every  year;  for,  if  one  has 
wealth  enough  to  improve  beyond  the  capacity  of  the  rest,  they  immedi- 
ately shift  a  proportion  of  their  tax  on  him;  and  this  has  accordingly 
happened,  early  as  it  is  in  the  day,  and  indeed  is  inherent  in  the  nature 
of  the  tax,  as  promulgated  by  the  assembly.  Thus  annual  assessments, 
annual  confusion,  annual  quarrels,  and  heart-burnings,  and  annual 
oppression,  must  be  the  consequence;  and  all  this  because  a  plain,  simple 
and  practicable  mode  of  assessment  was  not  laid  down  by  the  legislature 
itself,  instead  of  leaving  it  to  be  debated  and  fought  through  500  legis- 
latures, on  the  plan,  purely  ideal  and  theoretical,  of  the  CEconomistesl '^ 

How  this  principle  affected  him  individually  is  shown  by  the  following 
passage.  He  says,^  speaking  of  France:  "I  had  serious  thoughts  of 
settling  in  that  kingdom,  in  order  to  farm  there;  but  the  two  measures 
adopted,  of  a  variable  land-tax,  and  a  prohibition  on  the  export  of 
wool,  damped  my  hopes,  ardent  as  they  were,  that  I  might  have  breathed 
that  fine  climate,  free  from  the  extortion  of  a  government,  stupid  in 
this  respect  as  that  of  England." 

These  passages  show  the  effects  of  the  application  of  the  principles  of 
the  Physiocrats,  upon  one  of  the  best  informed  minds  of  that  day. 
They  suggest  some  fundamental  error  of  the  Physiocratic  position, 
in  both  conception  and  application. 

The  subject  may  be  briefly  reviewed.  The  problem  is  to  find  that 
portion  of  the  total  gross  production  of  a  society,  essential  neither  to 
putting  land  in  a  productive  condition,  nor  to  the  profits  necessary 
for  the  maintenance  of  such  a  condition.  The  Physiocrates  regarded 
this  as  a  portion  of  the  net  product  remaining  in  the  hands  of  productive 
land-owners  after  all  necessary  expenses  had  been  paid.  In  order  to 
collect  such  a  tax,  therefore,  they  supposed  it  essential  to  estimate 
and  assess  annually  this  net  product  in  the  hands  of  productive  owners 
of  land;  hence  the  methods  adopted,  and  the  difficulties  outlined  by 
Arthur  Young.  Yet,  in  a  study  of  the  subject,  as  presented  by  these 
men,  there  seems  no  other  way  to  assess  and  collect  such  a  tax.  The 
total  crude  product  must  apparently  be  directly  reached  through  pro- 
ductive land.  And  here,  it  seems,  lies  the  initial  error  of  the  Physio- 
cratic position,  in  conception  and  in  practice. 

At  the  outset  of  their  demonstration,  they  regarded  the  owners  of 
land  as  a  productive  class.    They  should  have  separated  the  land-owning 

»Ibid.,  p.  3SS. 


Bk.  IV  Natural  Economics  299 

class  into  two  distinct  subdivisions:  productive  and  non-productive 
land-owners.  Thus,  to  return  to  the  illustration,  that  portion  of  the 
total  crude  product  of  a  society  remaining  after  the  claims  of  Wages  and 
Profits  had  been  satisfied,  should  be  divided  as  follows:  There  will  be 
but  one  division  of  the  land-owning  class  having  any  just  claim  to  the 
remainder;  that  division  will  be  represented  by  productive  land-owners 
alone.  These  land-owners  will  naturally  claim  that  portion  of  the  total 
product  represented  in  the  rental  value  of  their  improvements,  and 
this  portion  should  be  handed  to  them.  After  these  needs  are  satis- 
fied, that  portion  of  total  product,  pre\'iously  handed  to  non-productive 
land-owners,  will  remain  for  distribution;  and  this,  it  would  seem,  is  the 
proper  portion  to  reserve  for  social  requirements.  The  non-productive 
land-owners  could  lay  no  claim  to  it,  for  their  land  would  have 
produced  no  part  of  the  annual  total;  their  land  would  have  produced 
nothing.  Land  of  this  non-productive  kind  is  represented  in  city  sites, 
franchises,  and  non-productive  values  in  general.  When,  therefore, 
an  amount  for  administrative  needs  is  to  be  withdrawn  from  the  total 
revenue  of  society,  this  non-productive  land-owning  class  should  con- 
tribute an  amount  equal  to  the  non-productive  or  unimproved  value 
of  its  land.  In  other  words,  the  non-productive  or  unimproved  value  of 
land,  in  the  form  of  site  and  franchise  values  and  undeveloped  mineral 
wealth,  shoiJd  remain  in  the  hands  of  the  society  and  not  be  distributed 
except  to  society  itself,  in  meeting  social  expenses.  When,  therefore, 
the  total  gross  product  is  to  be  distributed,  society  should  first  appro- 
priate to  itself  that  portion  represented  by  the  non-productive  value 
of  the  land  under  its  jurisdiction,  and  distribute  the  remainder  through 
the  natural  channels  of  exchange. 

This  position  understood,  many  of  the  difficulties  pointed  out  by 
Arthur  Young  with  reference  to  a  direct  land-tax,  disappear;  for,  assessed 
in  this  way,  it  would  bring  no  burden  upon  productive  land-owners 
but,  on  the  contrary,  could  fall  upon  non-productive  or  unimproved 
land  in  proportion  to  its  value.  Productive  industry  would  not  be 
taxed,  as  at  present,  improvements  would  not  be  penalized,  as  under  the 
existing  system;  and  socially  created  wealth  would  support  the  needs 
of  the  society.  This  is  apparently  the  only  way  in  which  that  which  is 
Caesar's  can  be  rendered  into  Caesar. 


Part  IV 
PROGRESS 


BOOK   I 
PROGRESS   AND   POLITICS 

BOOK  II 
INTELLECTUAL   PROGRESS 

BOOK   III 
RELIGION 

BOOK  IV 
PHILOSOPHY 


Book  I 

PROGRESS    AND    POLITICS 
CHAPTER   I 

INTRODUCTION 

THE  comparison  of  direct  and  indirect  fiscal  systems  is  not 
limited  to  economic  discussion.  The  direct  system  and 
Free  Trade  involve  the  abolition  of  import  taxation.  The 
abandonment  of  the  import  duty,  however,  entails  an  un- 
familiar form  of  social  organization,  which  may  be  regarded  with 
distrust,  upon  other  than  economic  grounds.  All  that  Smith  or  Mill 
wrote  in  opposition  to  Protection,  and  in  support  of  industrial  freedom, 
may  be  accepted;  the  theoretic  validity  of  direct  fiscal  systems  may  be 
admitted,  and  yet  the  abolition  of  the  import  duty  remains  open  to 
wide  discussion.  The  withdrawal  from  legislatures  of  power  to  tax 
consumption  would  be  followed  by  a  new  era  in  the  history  of  civiliza- 
tion. Such  a  step  would  have  direct  and  important  influence  upon 
the  production  and  distribution  of  wealth,  but  would,  at  the  same  time, 
have  other  influences  upon  society  at  large. 

The  import  duty  is  an  essential  factor  in  the  establishment  of  national 
distinctions,  national  policies  and  national  boundaries;  together  with 
their  attendant  rivalries,  industrial,  social  and  political.  The  aban- 
donment of  the  import  duty  would  thus  cause  important  modification 
in  international  relations,  through  the  elimination  of  these  distinctions. 
But  such  elimination  must  cause  decline  in  the  political  and  industrial 
rivalry  depending  upon  them.  Were  international  Free  Trade  estab- 
lished, many  existing  political  institutions  would  fall  into  disuse; 
among  the  most  important  of  which  would  probably  be  general  military 
organization.  Where  national  boundaries  cease  to  exist  commercially, 
the  maintenance  of  armaments  would  sooner  or  later  become  an  unnec- 
essary expense;  for  the  reason  that  politico-commercial  questions  would 
no  longer  exist  upon  the  international  horizon.  Where  the  ships  and 
traders  of  every  nation  have  the  freedom  of  whatever  lands  or  waters 

303 


304  Progress  and  Politics  Pt.  IV 

welcome  their  goods,  Protection  becomes  impossible,  "spheres  of  influ- 
ence" become  an  anachronism,  and  military  budgets  would  be  subjected, 
perhaps,  to  more  or  less  active  criticism,  wherever  greater  than  necessary 
for  police  work.  It  seems,  in  fact,  that  real  industrial  liberty,  if  ever 
adopted  on  a  large  scale,  must  sooner  or  later  fore-shadow  national 
disarmament.  Where  the  import  duty  ceases  to  exist,  the  chief  cause 
of  international  complication  has  been  destroyed,  and  the  industrial 
and  financial  interests  of  a  people  or  group  of  peoples  become  involved 
with  the  maintenance  of  peaceful  relations,  in  order  to  develop  markets 
and  establish  financial  confidence. 

Such  results  may  seem  desirable  from  a  pacific  point  of  \'iew.  This 
attitude  will  not  appeal  to  all,  however,  and  reasons  supporting  the 
permanent  repeal  of  the  import  duty  may  develop  grounds  for  its  per- 
manent adoption.  The  disadvantages  of  war  are  evident  and  need 
not  be  dwelt  upon;  the  disadvantages  of  permanent  peace,  however, 
to  many  observers  are  not  less  important.  The  highest  development 
of  human  society,  both  in  general  and  in  particular,  is  to  be  achieved 
but  by  bringing  each  nation,  or  political  organization,  to  its  highest 
pitch  of  efficiency  in  every  phase  of  activity.  But  this  can  be  done 
through  rivalry  and  competition  alone,  and  any  form  of  industrial 
freedom  which  decreases  this  competition  seems  subversive  of  human 
development.  The  import  duty  here  appears  as  a  factor  in  competitive 
industrial  and  political  conditions;  and,  consequently,  in  progress  in 
general.  These  conditions  are  not  only  the  invariable  forerunners  of 
other  progressive  influences,  but,  it  may  be  said,  all  progress  is  caused 
and  conditioned  by  material  political  progress.  With  increase  of  national 
wealth  and  political  power  come  intellectual  incentive  and  opportunity; 
the  development  of  the  arts  and  sciences,  and,  in  general,  those  influences 
tending  to  the  elevation  of  mankind  and  the  betterment  of  human  so- 
ciety, considered  not  only  materially  and  economically,  but  intel- 
lectually, ethically,  and  morally.  Upon  the  progressive  political  organi- 
zation then,  as  an  essential  foundation,  depend  those  influences  which 
might  be  called  the  superstructure  of  progressive  society:  the  arts, 
culture,  science,  philosophic  inquiry,  and  intellectual  development. 

These  considerations,  with  reference  to  relations  existing  between 
social  organziations,  may  be  applied  almost  literally  to  the  various 
relations  existing  within  the  society  itself;  for  competitive  influences, 
created  by  progressive  conditions  of  whatever  nature,  serve  but  to 
cause  an  increasing  degree  of  efficiency  within  the  social  limits;  this 


Bk.  I  Introduction  305 

efl&ciency  tending  to  increase  the  social  activities  in  every  field.  The 
fact  that  social  and  political  progress  demands  certain  conditions,  and 
that  these  conditions  bear  heavily  upon  the  industrial  masses,  may  be 
a  matter  of  regret;  but  such  conditions  seem  essential  to  national 
development.  Industrial  liberty,  that  is,  the  elimination  of  all  fiscal 
industrial  restrictions,  might  possess  certain  theoretic  advantages; 
but  its  ultimate  effect  would  check  existing  industrial  competition  to  a 
large  extent.  At  the  same  time,  the  relaxation  of  competitive  conditions 
must  cause  compensating  relaxation  in  industrial  efficiency;  with  the 
result  that  the  progressive  development  of  the  society  may  sooner  or 
later  be  adversely  affected,  internally  and  externally.  It  requires  no 
stretch  of  the  imagination  to  trace  these  influences  into  a  wider  field, 
beyond  the  national  existence.  The  records,  the  literature,  the  knowl- 
edge, which  a  nation  leaves  behind  it,  even  long  after  the  nation  itself 
has  disappeared;  the  science  and  thought  of  a  long  silent  people,  may 
still  aid  generations  of  which  an  ancient  race  had  never  dreamed;  and 
so,  upon  national  progress  depend,  not  alone  the  development  of  any 
given  society,  but  of  other  peoples,  of  all  peoples :  in  fact  of  humanity 
as  a  whole. 

In  the  panorama  of  history,  the  endless  flux  in  human  events  is  perhaps 
the  first  condition  noticed.  To  find  one  permanent  society,  one  enduring 
civilization,  is  impossible.  A  state,  an  empire  rises,  rules,  and  crumbles 
into  oblivion,  much  as  the  organic  units  of  which  it  is  composed;  yet 
each  leaves  some  trace  or  tradition  affecting  conqueror  and  conquered 
alike,  thus  contributing  in  some  degree  to  that  universal  change  of 
human  progress  in  its  entirety.  The  political  systems  and  institutions 
of  those  peoples  most  conspicuous  in  human  affairs  have  one  common 
characteristic  —  they  have  all  been  based  upon  a  progressive  conception 
of  society.  Man  is  everywhere  seen  organizing  for  purposes  of  economic 
and  political  achievement;  families  crystallize  into  tribes;  tribes  into 
peoples;  these  into  nations  and  empires;  flowing  over  other  portions  of 
the  human  sea  to  absorb  or  be  absorbed,  as  their  natural  efliciency 
and  fecundity  decide.  The  conditions  governing  these  movements,  and 
the  survival  or  extinction  of  the  nations  of  the  earth,  have  been  due  to 
their  fitness  or  failure  as  progressive  political  organizations.  These  or- 
ganizations again  must  have  depended  upon  military  efficiency,  not  for 
their  existence  alone  but  for  their  development  as  political  factors.  Thus, 
progress  in  all  its  phases  is  involved  with  political  society  as  it  has  ex- 
isted in  the  past  and  with  its  necessary  resultant  —  military  efficiency. 


3o6  Progress  and  Politics  Pt.  IV 

Progress,  both  material  and  intellectual,  national  and  political,  as 
well  as  in  its  wider  application  to  humanity  at  large,  may  thus  be 
traced  to  the  sheer,  mechanical  force  derived  from  efiective  mili- 
tary organization.  Progress  in  the  past  rests  upon  the  same  mar- 
tial and  material  basis.  To  this  cause  is  it  owing  that  weaker 
or  less  fit  races  have  been  exterminated  and  the  stronger  survived. 
If,  now,  the  chief  modern  factor  in  this  international  and  inter- 
racial process  is  removed,  if  the  essential  element  in  the  modern 
intersocial  struggle  for  life  is  abandoned,  the  struggle  itself  will  be 
carried  on  under  less  exacting  conditions  or  eventually  cease.  The 
elimination  of  national,  industrial  and  commercial  distinctions  might 
react  adversly  upon  national  and  industrial  progress,  if  not  arrest 
it  altogether,  and  with  it  the  development  of  humanity  as  a 
whole. 

It  is  but  a  step  from  this  attitude  to  the  evolutionary  hypothesis  and 
its  apparently  unavoidable  conclusions  with  reference  to  human  society. 
It  may  be  shown  from  the  researches  of  the  biologist,  as  well  as  from  the 
studies  of  the  political  observer,  that  the  static  society  is  a  practical 
and  theoretic  impossibility.  In  the  history  of  the  nations,  the  non- 
progressive organization  does  not  exist  and  carry  on  its  peaceful  tradi- 
tions beside  its  more  powerful  neighbours;  it  sooner  or  later  disappears 
from  the  stage,  and  the  world  knows  it  no  longer.  The  non-progressive 
society  does  not  merely  cease  to  progress;  it  ceases  to  exist,  through  causes 
generated  within  or  coming  from  without.  Both  political  history  and 
the  evolutionary  sciences  show  that  the  permanently  static  social 
condition  is  unknown.  In  the  history  of  the  races  of  man,  as 
in  that  of  the  organic  indi\ddual,  where  progression  ceases,  regression 
begins. 

Thus,  social  and  political  conditions,  into  which  military  eflSciency 
does  not  enter  as  an  essential  factor,  may  be  fraught  with  danger  to 
the  future  of  society.  Industrial  freedom,  therefore,  in  so  far  as  it 
involves  such  conditions,  is  open  to  this  objection.  Human  progress 
in  the  past  has  been  caused  by  the  rivalry  of  political  organizations,  based 
upon  military'  efficiency.  There  seems  no  other  basis  upon  which  prog- 
ress may  continue.  The  maintenance  of  the  import  duty,  in  establish- 
ing and  perpetuating  the  distinctions  upon  which  political  competition 
depends,  may  thus  be  regarded  as  among  the  conditions  essential  to 
human  progress.  Any  form  of  social  organization,  therefore,  tending 
to  the  elimination  of  national  competition,  may  be  regarded  with  dis- 


Bk.  I  Introduction  307 

trust,  as  subversive  of  progress  in  general.  This  opinion  has  been  pre- 
sented from  various  points  of  view.  From  that  of  the  practical  adminis- 
trator, it  may  be  found  in  a  message^  of  Mr.  Roosevelt  when  President 
of  the  United  States.  He  says:  "If  the  great  civilized  nations  of  the 
present  day  should  completely  disarm,  the  result  would  mean  an  im- 
mediate recrudescence  of  barbarism  in  one  form  of  another."  Doc- 
tor Maudsley^  expresses  the  same  idea  from  another  point  of  view:  "It 
may  justly  be  doubted,"  he  says,  "whether  it  is  anything  more 
than  elusive  imagination  that  foresees,  as  crown  of  organic  evolu- 
tion, a  race  of  placid  beings  bound  together  in  imity  of  spirit, 
making  the  whole  earth  busy  with  their  peaceful  industries,  per- 
suaded rationally  of  the  folly  of  war,  and  living  lives  of  good-will 
and  good  works  to  one  another;  whether  in  fact  such  a  consumma- 
tion would  not  mean  the  emasculation  physical,  moral,  and  intel- 
lectual of  the  race."  The  attitude  of  the  evolutionary  scientist 
is  suggested  in  the  following  passage:  "In  one  of  my  latest  con- 
versations with  Darwin,"  says  Alfred  Russel  Wallace,^  "he  expressed 
himself  very  gloomily  on  the  future  of  humanity,  on  the  ground  that 
in  our  modern  civilization  natural  selection  had  no  play  and  the 
fittest  did  not  survive." 

It  may  thus  seem  that  any  system  of  political  organization  tending 
to  check  political  and  industrial  competition  would  eliminate  the  es- 
sential factor  in  the  play  of  natural  selection  as  applied  to  modern  society, 
with  the  proportionate  subversion  of  progressive  conditions  in  all  their 
phases.  This  attitude  shows  how  great  and  far-reaching  are  the 
benefits  traceable  to  the  progressive  conception  of  society  based  upon 
military  efl5ciency ;  for  upon  it  may  depend  not  only  the  present  develop- 
ment of  the  nation,  but  its  future,  together  with  that  of  humanity  at 
large.  The  generations  may  thus  regard  themselves  as  trustees  of  the 
progress  and  culture  of  the  past;  handing  on  the  torch  of  enlightenment 
to  generations  yet  to  be.  Thus,  not  material  wealth  alone  is  the  object 
of  the  progressive  political  organization  of  society,  but  the  perpetuation 
of  the  treasures  of  the  arts,  the  intellect,  and  the  wisdom  of  the  ages;  the 
highest  ethical  and  moral  systems  of  mankind;  his  spiritual  aspirations, 
and  last,  but  most  important,  perhaps,  the  future  of  the  race.  Eco- 
nomics are  here  left  behind,  and  problems  suggested  dealing  with  national 

•  Message  communicated  to  the  two  Houses  of  Congress  at  the  beginning  of  the  Third  Session  of  the  Fifty- 
eighth  Congress,  p.  32. 

'  Body  and  Will,  Henry  Maudsley,  M.  D.,  pp.  325-326. 

»  Human  Selection,  Fortnightly  Review,  September,  1890,  p.  325. 


3o8  Progress  and  Politics  Pt.  IV 

development,  intellectual  and  moral  progress,  and  the  future  of  humanity 
as  a  whole. 

Progress  can  have  but  two  forms:  physical  and  psychical.  The  first 
must  be  studied  through  the  biological  and  evolutionary  sciences;  the 
second  by  means  of  other  methods.  The  attention  will  be  turned  first 
to  the  relation  of  the  evolutionary  sciences  to  progressive  political 
society. 


CHAPTER  n 

DARWIN  AND  WEISMANN 

THE  discussion  of  human  progress  leads  to  the  evolutionary- 
sciences.  A  brief  statement  of  the  evolutionary  hypothesis, 
with  its  later  development,  may,  therefore,  not  be  out  of 
place. 

The  evolutionary  conception  of  organic  existence  may  be  as  old  as 
thought  itself. 

"Theories  of  the  universe,  in  which  the  conception  of  evolution  plays 
a  leading  part,"  says  Professor  Huxley,^  "were  extant  at  least  six 
centuries  before  our  era.  Certain  knowledge  of  them,  in  the  fifth  century, 
reaches  us  from  localities  as  distant  as  the  valley  of  the  Ganges  and 
the  Asiatic  coasts  of  the  ^gean.  To  the  early  philosophers  of  Hindo- 
stan,  no  less  than  to  those  of  Ionia,  the  salient  and  characteristic  feat- 
ure of  the  phenomenal  world  was  its  changefulness;  the  unresting 
flow  of  all  things  through  birth  to  visible  being  and  thence  to  not  being, 
in  which  they  could  discern  no  sign  of  a  beginning  and  for  which  they 
saw  no  prospect  of  an  ending." 

The  evolutionary  conception  of  the  Cosmos  dawns  with  the  earliest 
thought,  is  suggested  in  Greek  inquiry,  developed  by  Buff  on  and  Lamarck, 
given  scientific  expression  in  the  researches  of  Darwin  and  Wallace, 
while  later  inquiry  carries  the  subject  almost  as  far  beyond  the  earlier 
contributions  of  the  last  century  as  were  these  beyond  the  conception 
of  Goethe  and  Lamarck. 

There  are  two  fundamental  conceptions  of  the  Darwinian  theory: 
(i)  The  enormous  power  of  increase  with  which  every  form  of  life  is 
endowed.  (2)  The  tendency  of  individuals  to  vary  in  all  directions 
within  certain  limits,  together  with  the  capacity  for  the  transmission 
of  the  variations  in  a  greater  or  less  degree.  "As  many  more  individuals 
of  each  species  are  born,"  says  Darwin, ^  "than  can  possibly  survive; 
and  as,  consequently,  there  is  a  frequently  recurring  struggle  for  ex- 
istence, it  follows  that  any  being,  if  it  vary  however  slightly  in  any  manner 


>  Evolution  and  Ethics,  pp.  53-34. 
•  The  Origin  of  Species,  Vol.  I.,  p.  5. 


309 


3IO  Progress  and  Politics  Pt.  IV 

profitable  to  itself,  under  the  complex  and  sometimes  varying  conditions 
of  life,  will  have  a  better  chance  of  surviving,  and  thus  be  naturally 
selected.  From  the  strong  principle  of  inheritance,  any  selected  variety 
will  tend  to  propagate  its  new  and  modified  form."  This  passage 
contains  the  statement  in  its  simplest  form  of  the  principles  upon  which 
the  law  of  natural  selection  is  based. 

In  the  operation  of  such  a  process  it  occurs  "that  the  structure  of 
every  organic  being  is  related,  in  the  most  essential  yet  often  hidden 
manner,  to  that  of  all  the  other  organic  beings,  with  which  it  comes  into 
competition  for  food  or  residence,  or  from  which  it  has  to  escape,  or 
on  which  it  preys." ^  "It  may  metaphorically  be  said,"  continues 
Darwin,2  "that  natural  selection  is  daily  and  hourly  scrutinizing, 
throughout  the  world,  the  slightest  variations;  rejecting  those  that  are 
bad,  preserving  and  adding  up  all  that  are  good;  silently  and  insensibly 
working,  whenever  and  wherever  opportunity  offers,  at  the  improvement 
of  each  organic  being  in  relation  to  its  organic  and  inorganic  conditions 
of  life." 

Such  is  the  briefest  possible  statement  of  the  theory  of  biological 
evolution  as  announced  by  Darwin,  and  the  earlier  inquirers.  In  the 
Origin  of  Species,  the  thought  of  Darwin  is  largely  occupied  with  the 
relation  of  variations  profitable  to  the  indi\ddual  form  immediately 
affected;  with  the  advantages  of  such  variation  to  the  individual  it- 
self. The  passages  cited  illustrate  this  position.  In  this  connexion, 
an  important  development  has  taken  place  in  recent  biological  investi- 
gation, showing  that  the  types  selected  are  not  necessarily  those  prof- 
itable to  the  individual  in  the  present,  but  those  through  which  the 
species  is  likely  to  find  its  most  effective  development  in  relation  to  its 
environment.  The  struggle  for  life  is  carried  on  not  between  individuals, 
as  individuals,  but  between  typical  forms  toward  which  these  individuals 
tend;  and  to  the  larger  interests  of  which  the  interests  of  the  individual 
form  must  be  subordinate. 

Such  a  consequence  seems  involved  in  even  the  earliest  formulation 
of  the  naturally  selective  process  as  a  necessary  corollary.  As  the 
essence  of  the  principle  is  that  it  must  act  in  the  manner  conducive  to 
the  most  effective  results,  it  seems  that  it  must  act  through  the  media 
of  the  largest  numbers.  These  largest  numbers,  this  majority  in  the 
life  cycle  of  a  species,  can,  however,  never  be  in  the  present,  but  lie 

»  Ibid.    Vol.  I.,  p.  Q4. 
'  Ibid.     pp.  102-103. 


Bk.  I  Darwin  and  Weismann  311 

within  that  long  series  of  generations  covering  the  existence  of  the 
species  in  its  entirety.  Other  things  equal,  it  seems  that  the  most  efficient 
forces  in  the  evolutionary  process  must  be  those  by  means  of  which  the 
interests  of  existing  individuals  are  most  effectively  subordinated  to 
the  development  of  the  typical  form  of  the  series  of  generations  covering 
the  whole  number  of  organic  existences  involved.  The  interests  of 
the  indi\ddual,  as  an  individual,  and  the  importance  of  those  modifica- 
tions profitable  to  itself,  have  thus  a  subordinate  place  in  the  economy 
of  natural  selection;  except  as  identical  with  the  larger  ends  of  general 
and  typical  development. 

The  labours  of  the  later  biological  inquirers  support  this  view.  Until 
recently,  the  theories  of  the  causes  dominating  the  average  length  of 
individual  life  may  be  said  to  have  moved  along  two  parallel  lines,  fa- 
miliar to  students  of  Mr.  Spencer's  Biology,  and  the  works  of  the  earlier 
evolutionists.  In  accordance  with  one  position,  adopted  by  Leuchart 
and  others,  which  may  be  called  the  theory  of  external  control  the 
duration  of  life  was  supposed  to  be  determined  by  the  size  of  the  indiA^dual 
and  the  complexity  of  its  structure.  In  the  words  of  Mr.  Spencer,^ 
"greater  integration  "  should  be  regarded  as  the  basis  of  the  realization 
of  the  life  cycle,  in  length  and  degree.  In  accordance  with  the  other 
theory,  which  may  be  called  that  of  internal  control,  length  of  life 
was  considered  as  related  to  the  chemical  constitution  of  the  cells  of 
which  the  body  was  composed. 

Professor  Weismann's  views  are  opposed  to  both  these  positions. 
He  says,2  "I  consider  that  duration  of  life  is  really  dependent  upon 
adaptation  to  external  conditions,  that  its  length,  whether  longer  or 
shorter,  is  governed  by  the  needs  of  the  species":  and  again, ^  with 
reference  to  animal  life,  "that  nature  does  not  tend  to  secure  the 
longest  possible  life  to  the  adult  indi\idual,  but,  on  the  contrary,  tends 
to  shorten  the  period  of  reproductive  acti\'ity,  as  far  as  possible,  and 
with  this  the  duration  of  life." 

The  principle  which  Professor  Weismann  found  in  the  ascendant, 
in  the  action  of  natural  selection,  was  the  need  of  the  species,  taken  as  a 
a  whole,  and  spread  over  entire  series  of  generations.  This  might  be 
pictured  by  concei\ang  the  ideal  needs  of  the  species  as  projected,  as 
it  were,  in  front  of  the  advancing  vital  form.    The  actual  type  most 


•  Principles  of  Psychology,  Vol.  I.,  §  172,  p.  384.     Principles  of  Biology,  Vol.  I.,  §  31,  p.  82. 
'  Weismann  on  Heredity ,  The  Duration  of  Life,  Vol.  I.,  p.  g. 
'  Ibid.  p.  II. 


312  Progress  and  Politics  Pt.  IV 

nearly  conforming  to  this  ideal  representative  will  be  the  one  "naturally 
selected."  In  a  rapidly  changing  environment,  adaptability  would, 
doubtless,  be  more  readily  secured  through  short-lived  rather  than  through 
long-lived  generations.  To  serve  the  needs  of  the  species,  then,  and  not 
those  of  the  individual,  it  is  held,  is  the  length  of  life  either  lengthened 
or  curtailed;  the  dominant  forces  of  nature  imposing  conditions  in  which 
the  length  and  breadth  of  the  life  of  the  individual  play,  relatively, 
little  part. 

In  this  larger  view  of  the  selective  process,  series  of  generations,  and 
even  entire  species,  are  pitted  against  each  other  in  a  struggle  in  which 
typical  efficicency  in  a  future,  perhaps  distantly  removed,  is  the  quality 
for  which  the  victor  strives,  and  in  the  furtherance  of  which  his  own 
immediate  interests  may  have  little  place.  The  drama  of  progress  is 
thus  involved  with  interests  always  apparently  beyond  the  reach  of 
existing  generations. 

The  inquiries  of  Professor  Weismann,  and  those  of  later  biologists, 
show  apparently  that  the  duration  of  individual  existence  is  not  de- 
pendent upon  the  size  or  molecular  constitution  of  the  body;  but  is 
rather  lengthened  or  shortened  in  accordance  with  the  requirements 
of  the  species  as  a  whole.  When,  however,  the  lowest,  or  single-celled, 
forms  of  life  are  observed,  nothing  corresponding  to  death,  as  it  occurs 
in  higher  forms,  is  found.  In  the  single  cell  the  cycle  of  vital  exist- 
ence is  continuous;  the  individual,  under  certain  conditions,  simply 
separating  into  two  or  more  parts,  and  these  continuing  to  live  and  grow 
and  separate  again  indefinitely.  Here  arises  one  of  the  most  suggestive 
generalizations  in  the  history  of  biological  science,  second  to  natural 
selection  alone.  The  phenomenon  of  death  is  found  at  an  early  stage 
of  the  evolutionary  process,  as  the  fundamental  expression  of  progress, 
underlying  from  the  beginning  that  series  of  changes  upon  which 
progressive  life  has  entered.  In  this  conception  of  death,  as  a 
factor  in  the  cosmic  process,  the  principle  of  natural  selection 
develops  a  larger  meaning.  A  fundamental  principle  is  found 
inherent  in  all  evolutionary  phenomena,  a  principle  involving  the 
constant  subordination  of  the  individual  and  the  immediate  to  the 
general  and  the  universal;  of  the  particular  and  concrete  to  the 
typical  and  abstract. 

A  study  of  the  place  of  death  in  the  action  of  natural  selection  leads 
at  once  to  inquiries  with  reference  to  the  nature  of  heredity.  There 
appear  but  two  possible  hypotheses  upon  which  explanations  of  heredity 


Bk.  I  Darwin  and  Weismann  313 

may  be  based.  "Either,"  says  Professor  Weismann,*  "the  substance 
of  the  parent  germ-cell  is  capable  of  undergoing  a  series  of  changes 
which,  after  the  building-up  of  a  new  individual,  leads  back  again  to 
identical  germ-cells;  or  the  germ-cells  are  not  derived  at  all,  as  far  as 
their  essential  and  characteristic  substance  is  concerned  from  the  body 
of  the  individual,  but  they  are  derived  directly  from  the  parent  germ- 
cell."  The  latter  is  the  position  adopted  by  Professor  Weismann; 
as  holding  the  same  opinion  he  cites^  Ray  Lankester,  Brooks,  Meynert, 
van  Bemmelen  and  others.  To  this  list  W.  Platt-BalF  adds  Wallace, 
Poulton,  Francis  Galton  and  others;  while  Wallace^  himself  increases 
the  list  with  the  names  of  Lloyd-Morgan,  Sir  W.  T.  Thiselton-Dyer  and 
Mr.  G.  Archdall  Reid.  The  position  here  developed  is  known  as  the 
Continuity  of  the  Germ-plasm,  and,  in  the  words  of  Professor  Weismann,^ 
is  "founded  upon  the  idea  that  heredity  is  brought  about  by  the  trans- 
ference from  one  generation  to  another,  of  a  substance  with  a  definite 
chemical,  and  above  all,  molecular  constitution."  The  germ-plasm 
might  thus  be  represented  as  Professor  Weismann^  says,  "by  the  meta- 
phor of  a  long  creeping  root-stock  from  which  plants  arise  at  intervals, 
these  latter  representing  the  individuals  of  successive  generations." 

Upon  this  theory,  to  unite  the  hereditary  qualities  of  two  individuals, 
and  so  secure  the  advantages  to  be  obtained  from  the  constant  blending 
of  individual  modifications,  requires  that  every  new  life  should  return 
to  the  original  starting-point  —  the  single  cell;  there,  and  there  alone, 
can  occur  the  union  in  the  new  individual  of  the  hereditary  qualities 
of  both  progenitors.  It  is  unnecessary  to  enter  into  the  thick  of  bio- 
logical inquiry;  that  which  concerns  the  present  purpose  is  that  wherever 
the  law  of  natural  selection  appears,  whether  in  its  earlier  or  later  state- 
ments, the  interests  of  the  majority  of  individuals  are  constantly  sub- 
ordinated to  its  action.  The  investigations  of  later  inquirers  strengthen 
this  position,  and  show  the  increasing  intensity  of  the  competitive 
struggle  required  by  progressive  conditions.  As  Professor  Weismann^ 
says,  speaking  of  the  action  of  natural  selection:  "In  order  that  any 
part  of  the  body  of  an  individual  of  any  species  may  be  kept  at  the 
maximum  degree  of  development,  it  is  necessary  that  all  individuals 

'  Weismann  on  Heredity,  Vol.  I.     Continuity  of  the  Germ-plasm,  p.  170. 

»  The  Germ-plasm,  p.  3g6. 

«  The  Effects  of  Use  and  Disuse,  p.  vi. 

*  Evolution  and  Character,  Fortnightly  Review,  January  1908,  p.  11. 
'  Essays  on  Heredity,  Vol.  I.,  Continuity  of  the  Germ-plasm,  p.  170. 

•  Ibid.,  Significance  of  Sexual  Reproduction,  p.  273. 
'  Ibid.,  p.  209. 


314  Progress  and  Politics  Pt.  IV 

possessing  it  in  a  less  perfect  form  must  be  prevented  from  propagation 
—  they  must  succumb  in  the  struggle  for  existence."  This  position  is, 
apparently,  but  the  essential  corollary  of  the  law  of  natural  selection 
as  formulated  by  Darwin;  nor  were  he  and  the  earlier  thinkers  uncon- 
scious of  it  as  the  passage  cited  from  Mr.  Wallace  would  show  with 
reference  to  Darwin's  "gloomy"  expressions  in  connexion  with  the  future 
of  humanity,  on  the  grounds  of  the  checking  of  the  selective  process  by 
modern  civilization.  Natural  selection,  acting  as  it  does  through  vital 
competition,  entails  the  continuance  of  that  process;  not  only  as  es- 
sential to  progress,  but  as  essential  to  either  static  or  non-retrogressive 
conditions.  "From  the  war  of  nature,"  says  Darwin, i  "from  famine 
and  death,  the  most  exalted  object  which  we  are  capable  of  conceiving, 
namely,  the  production  of  the  higher  animals,  directly  follows."  Weis- 
mann,2  after  a  brief  statement  of  the  theory  of  natural  selection  as 
formulated  by  Darwin  and  Wallace,  expresses  the  necessary  conclusion 
in  the  following  terms:  "If  this  view  be  the  true  one,  if  adaptation  in 
all  parts  of  living  forms  be  truly  the  result  of  natural  selection,  then 
the  same  process  which  produced  these  adaptations  will  tend  to  preserve 
them,  and  they  will  disappear  directly  natural  selection  ceases  to  act. 
These  considerations  show  why  organs  which  have  become  superfluous 
and  have  fallen  into  disuse  necessarily  degenerate  and  ultimately  dis- 
appear." This  position,  while  in  a  sense  among  the  later  developments 
of  modern  biological  science,  has  long  been  familiar  to  those  brought 
into  contact  with  nature.  This  is  shown  in  the  selection  which  the 
agriculturist  makes  of  his  seed-grain  or  stock,  and  the  "running  out" 
of  the  product  without  selection.  Such  a  process  was  doubtless  apparent 
to  the  first  systematic  shepherds  or  tillers  of  the  soO.  Virgil  gives  it 
accurate  expression  in  the  Georgics.^  After  recommending  such  annual 
selection  of  seed  to  the  husbandman,  he  says  that  "the  natural  ten- 
dency of  all  things  is  toward  degeneration  and  reversion ;  as  when  pull- 
ing against  a  stream,  a  rower  who  relaxes  his  efforts  for  a  moment,  is 
caught  in  the  current  and  drawn  down  the  river  again." 

When  the  principles  of  natural  selection  are  grasped,  their  application 
throughout  the  evolutionary  process  becomes  evident.  The  fact  that 
progress  can  continue  but  through  vital  competition  and  selection  shows, 
were  it  possible  to  construct  the  scientific  formula  of  the  existence  of 


^The  Origin  of  Species,  Vol.  II,  p.  305. 

'  Essays  on  Hereditary,  Vol.  II.,  Retrogressive  Development  iti  Nature,  p.  16. 

»  I.,  p.  199. 


Bk.  I  Darwin  and  Weismann  315 

any  progressive  form  of  life,  that  the  interests  of  the  existing  individual 
would  find  no  symbol  therein;  except  as  included  in  those  larger  interests 
of  the  progressive  species  as  a  whole. 

The  conclusions  suggested  by  the  evolutionary  sciences  are  that  the 
interests  of  a  progressive  species,  as  such,  and  the  interests  of  the  majority 
of  its  constituent  units  are  opposed:  that,  in  fact,  the  moment  an 
organic  form  enters  into  progressive  competition  with  other  forms,  the 
sacrifice  of  the  interest  of  the  majority  of  individuals,  represented  in 
any  given  period  or  series  of  generations,  becomes  a  condition  of 
development.  This  is  the  fundamental  position  to  which  the  evolu- 
tionary sciences  seem  to  lead,  applied  to  the  lowest  form  of  organic 
existence  or  to  the  highest  phases  of  human  society. 


CHAPTER  III 

POLITICAL  PROGRESS  AND  REASON 

THE  view  of  vital,  progressive  conditions  formulated  in  the 
Origin  of  Species  and  the  Descent  of  Man  suggests  a  revision 
of  accepted  social  theories  and  conceptions.  It  may  even 
suggest,  if  the  purpose  of  social  organization  is  the  furtherance 
of  the  interests  of  the  majority  concerned,  that  many  such  conceptions 
require  important  modification.  The  first  essential  of  progress  is  that 
all  individuals  cannot  succeed.  The  path  of  progress  is  strewn  with 
the  ghosts,  as  it  were,  of  countless  millions  of  the  unsuccessful,  fallen 
and  exterminated,  in  order  that  others  might  survive  and  reproduce. 
No  form  of  life  can  advance,  or  retain  its  position,  by  means  other  than 
the  propagation  of  the  species  through  individuals  above  the  average; 
and,  in  consequence,  through  constantly  multiplying  beyond  the  limits 
of  comfortable  existence,  with  the  inevitably  entailed  vital  competition. 
One  feature  of  the  process,  therefore,  seems  evident;  namely,  had  it 
been  possible  at  any  time  for  any  species  to  secure  itself  against  the 
competition  of  others,  that  it  would  have  been  to  the  interest  of  the 
majority  concerned  to  have  suspended  the  conditions  of  vital  competi- 
tion among  themselves.  That  the  progressive  development  of  the 
species  might  be  arrested  thereby  could  have  no  weight,  for  the  reason 
that  such  a  suspension  of  progressive  competition  would  not  only  have 
been  to  their  own  immediate  interests  in  the  present,  but  to  the  interests 
of  the  majority  of  all  future  generations  as  well.  Progress  can  be  main- 
tained but  by  constantly  sacrificing  the  vital  interest  of  the  majority 
of  all  individuals  involved,  existing  and  to  come.  This  necessity, 
sooner  or  later,  brings  all  the  forms  under  competitive  influences,  and 
requires  the  propagation  of  the  species  through  the  agency  alone  of 
those  above  the  average  development,  with  the  result  that  the  majority 
of  the  individuals  of  any  existing  generation,  and,  in  the  life  of  the  species, 
the  overwhelming  majority  of  all  individuals,  must  be  prevented  from 
realizing  the  fullest  possibilities  of  existence.  In  looking  back  over  the 
progressive  chain  of  organic  existence,  the  sacrifices  of  the  majority  of 
unnumbered  preceding  generations  must  have  been  entailed. 

316 


Bk.  I  Political  Progress  and  Reason  317 

In  turning  the  attention  to  the  human  species,  it  seems  that  the  exist- 
ing generation  stands  upon  the  eminence  attained  through  having  tram- 
pled, as  it  were,  over  the  prostrate  forms  of  the  majority  of  those  who 
came  before.  Since  man  separated  himself  from  lower  organisms,  and 
came  under  the  influence  of  conditions  called  human,  progress  has  been 
carried  on  in  the  same  way  as  throughout  other  forms  of  life:  through 
the  unremitting  struggle,  suffering,  and  premature  death  of  the  majority 
of  each  generation.  As  generation  succeeds  generation,  and  series 
succeeds  series,  it  is  evident  that  progress  has  entailed  not  alone  the 
sacrifice  of  the  interests  of  the  majority,  but  of  a  majority  constituting 
the  overwhelming  preponderance  of  all  the  individuals  brought  under 
progressive  influences.  The  generations  gone  before  have  offered 
themselves  a  living  sacrifice  upon  the  altar  of  the  typically  progressive 
form;  the  same  process  continues  to-day  and  projects  itself  into  the 
future. 

In  a  study  of  the  life  and  death  struggles  of  the  peoples,  the  names 
of  but  few  of  which  have  been  preserved,  the  query  occurs:  What 
advantage  they  could  have  found  in  supporting  such  conditions.  The 
chief  significance  of  the  life  of  prehistoric  generations  was  apparently 
a  ruthless  trial  of  their  vital  forces.  As  man  emerges  from  his  first 
infancy,  and  passes  into  the  clearer  light  of  history,  he  seems  governed 
by  the  same  conditions;  and  where  freed  from  competition  with  other 
species,  he  but  enters  into  progressive  competitive  struggle  with  his 
own  kind.  Human  history  thus  presents  much  the  same  conditions  of 
progress  as  the  history  of  other  species;  and  tribes,  races  and  nations 
succumb  or  survive  in  a  never  relaxed  competitive  process.  As  the 
significance  of  such  conditions  is  appreciated;  as  some  dim  conception 
dawns  upon  the  mind  of  the  misery,  suffering  and  premature  death 
caused  throughout  the  progress  of  the  past,  the  intelligence  of  preceding 
generations  becomes  questionable.  It  seems  difficult  not  to  wonder 
at  the  use  they  have  made  of  the  supposedly  distinguishing  human 
attribute  of  reason.  The  dictates  of  reason  would,  apparently,  have 
rendered  but  one  course  acceptable  —  to  abandon  conditions  which 
entailed  nothing  but  the  suffering  and  failure  of  the  majority.  They 
could  have  done  this  by  limiting  increase  to  the  means  of  subsistence, 
by  checking  competition  among  different  groups  through  the  widest 
possible  political  union,  and  have  led  lives  of  relative  peace  and  ease. 

They  did,  however,  nothing  of  the  kind.  On  the  contrary,  conditions 
involved  in  the  progressive  process  of  the  lowest  organisms  are  carried 


3i8  Progress  and  Politics  Pt.  IV 

into  higher  animal  existence,  and  extend  without  interruption  through 
the  highest  forms  of  life.  Each  generation  of  men  accepts  its  martyrdom 
in  the  name  of  an  ever-receding  posterity  as  blindly  and  unconsciously, 
apparently,  as  did  the  generations  of  any  extinct  fossil  species,  or  of 
the  simpler  vegetable  forms.  Human  generations  offer  themselves  to 
be  bled  upon  the  altar  of  generations  yet  to  be;  which,  as  they  come  into 
existence,  take  up  the  process  in  turn,  and  hand  it  on  to  their  children, 
and  their  children's  children,  entailing  the  suppression  of  the  vital 
interests  of  the  majority  of  all  concerned  —  past,  present,  and  to  come 
—  until  the  species  finds  rest  at  last  among  the  remains  of  completed 
geological  periods. 

Man's  history,  in  fact,  seems  but  one  long  unconscious  process  of 
self-immolation.  "I  know  of  no  study,"  says  Professor  Huxley, ^ 
''which  is  so  unutterably  saddening  as  that  of  the  evolution  of  humanity, 
as  it  is  set  forth  in  the  annals  of  history.  Out  of  the  darkness  of  pre- 
historic ages  man  emerges  with  the  marks  of  his  lowly  origin  strong  upon 
him.  He  is  a  brute,  only  more  intelligent  than  other  brutes;  a  blind 
prey  to  impulses,  which  as  often  as  not  lead  him  to  destruction;  a  victim 
to  endless  illusions,  which  make  his  mental  existence  a  terror  and  a  burden, 
and  fill  his  physical  life  with  barren  toil  and  battle.  He  attains  a  cer- 
tain degree  of  physical  comfort,  and  develops  a  more  or  less  workable 
theory  of  life,  in  such  favourable  situations  as  the  plains  of  Mesopotamia, 
or  of  Egypt,  and  then,  for  thousands  and  thousands  of  years,  struggles 
with  varying  fortunes,  attended  by  infinite  wickedness,  bloodshed,  and 
misery,  to  maintain  himself  at  this  point  against  the  greed  and  the 
ambition  of  his  fellow-men." 

How,  it  may  be  asked,  can  the  possession  of  reason  be  reconciled 
with  the  maintenance  of  such  conditions;  reason,  which,  it  would  seem 
gives  power  and  intelligence  suflQcient  to  check  the  aimless  process? 
Why  should  man  support  and  perpetuate  conditions  which  stifle  the 
higher  realization  of  his  being?  This  is  the  question  suggested  by  the 
application  of  the  evolutionary  sciences  to  human  society. 

The  comparatively  recent  developments  of  evolutionary  and  bio- 
logical inquiry  render  the  bulk  of  earlier  political  and  social  investigation 
unavailable  in  this  connexion.  Although  the  essential  conditions  govern- 
ing the  progressive  modification  of  lower  vdtal  forms  have  doubtless 
been  familiar  to  thoughtful  observers  for  thousands  of  years,  the  reali- 
zation that  man  is  governed  by  identical  conditions,  together  with  all 

*  Science  and  Christian  Tradition,  Agnosticism,  p.  256. 


Bk.  I  Political  Progress  and  Reason  319 

that  this  implies,  is  but  beginning  to  appear  in  inquiry.  The  works 
of  even  such  a  recent  and  comprehensive  thinker  as  Mr.  Spencer  are 
not  entirely  satisfactory  in  the  light  of  more  recent  biological  develop- 
ments. Mr.  Benjamin  Kidd  presents  one  of  the  most  suggestive  reviews 
of  the  subject.  The  study  of  human  society  from  the  position  formulated 
by  the  evolutionary  sciences  develops  a  certain  path  of  inquiry.  Starting 
from  the  purely  physico-biological  position,  and  asking  what  relation 
it  bears  to  human  society,  the  mind  can  apparently  but  drift  along 
certain  lines.  There  have  been  clearly  traced  by  Mr.  Kidd,  and  rather 
than  merely  parallel  his  thought,  a  few  of  his  pages  may  be  transcribed. 

"How  is  the  possession  of  reason,"  asks  Mr.  Kidd,i  repeating  the 
foregoing  question,  "ever  to  be  rendered  compatible  with  the  will  to 
submit  to  conditions  of  existence  so  onerous,  requiring  the  effective  and 
continual  subordination  of  the  individual's  welfare  to  the  progress  of  a  de- 
velopment in  which  he  can  have  no  personal  interest  whatever?     .     .     . 

"The  possession  of  reason  must,  it  w^ould  seem,  involve  the  oppor- 
tunity of  escape  from  the  conditions  mentioned.  The  evidence  would, 
however,  appear  to  point  indubitably  to  the  conclusion  that  these 
conditions  can  have  had  no  sanction  from  reason  for  the  mass  of  the 
individuals  subjected  to  them.  It  may  be  held  that  they  are  conditions 
essential  to  progress,  and  that  the  future  interests  of  the  society  to  which 
we  belong,  and  even  of  the  race,  would  inevitably  suffer  if  they  were: 
suspended.  But  this  is  not  an  argument  to  weigh  with  the  individual 
who  is  concerned  with  his  own  interests  in  the  present  and  not  with  the 
possible  interests  in  the  future  of  society  or  the  race.  It  seems  impossible 
to  conceive  how  the  conditions  of  progress  could  have  had  any  rational 
sanction  for  the  host  of  exterminated  peoples  of  whom  a  vision  arises 
before  us  when  we  compare  the  average  European  brain  of  to-day  with 
that  of  the  lowest  savages,  and  consider  the  steps  by  which  alone  the 
advance  can  have  been  made.  The  conditions  of  progress  may  be 
viewed  complacently  by  science,  but  it  can  hardly  be  said  that  they  can 
have  any  rational  sanction  for  the  Red  Indian  in  process  of  extermination 
in  the  United  States,  for  the  degraded  negro  in  the  same  country,  for 
the  Maori  in  New  Zealand,  or  the  Aboriginal  in  Australia. 

"The  same  conclusion  is  not  less  certain,  although  it  may  be  less 
obvious  elsewhere.  The  conditions  of  existence  cannot  really  have  had 
any  rational  sanction  for  the  great  mass  of  the  people  during  that  pro- 
longed period  when  societies  were  developed  under  stress  of  circumstances 

_  *  ''iocial  Evolution,  pp.  68-80.  " 


320  Progress  and  Politics  Pt.  IV 

on  a  military  footing.  An  inevitable  feature  of  all  such  societies  was 
the  growth  of  powerful  aristocratic  corporations,  and  autocratic  classes 
living  in  wealth  and  power  and  keeping  the  people  in  subjection  while 
despising  and  oppressing  them.  It  is  no  answer,  it  must  be  observed, 
to  say  that  these  societies  were  a  natural  product  of  the  time,  and  that 
if  any  social  group  had  not  been  so  organized,  it  must  ultimately  have 
disappeared  before  stronger  rivals.  We  can  scarcely  shut  our  eyes  to 
the  fact  that  the  future  did  not  concern  the  existing  members,  and 
that  to  the  great  mass  of  the  people  in  these  societies,  who  lived  and 
suffered  in  subjection  to  the  dominant  class  which  a  military  organi- 
zation produced,  the  futiure  of  society,  or  even  of  the  race,  was  a  matter 
of  perfect  indifference,  compared  with  the  actual  and  obvious  hardships 
of  their  own  oppressed  condition  in  the  present. 

"When  we  come  to  deal  with  society  as  it  exists  in  the  highest  and 
most  advanced  civilizations  of  our  time,  and  put  the  same  question  to 
ourselves  as  regards  the  conditions  of  existence  for  the  masses  of  the 
people  there,  it  is  startling  to  find  that  we  are  compelled  to  come  to  a 
like  conclusion.  The  conditions  of  existence  even  in  such  communities 
can  apparently  have  no  rational  sanction  for  a  large  proportion  of  the 
individuals  comprising  them.  When  the  convenient  fictions  of  society 
are  removed,  and  examination  lays  bare  the  essential  conditions  of  life 
in  the  civilisation  in  which  we  are  living,  the  truth  stands  out  in  its  naked 
significance.  We  are  speaking,  it  must  be  remembered,  of  a  rational 
sanction,  and  reason  has,  in  an  examination  of  this  kind,  nothing  to  do 
with  any  existence  but  the  present,  which  it  insists  it  is  our  duty  to 
ourselves  to  make  the  most  of.  The  prevailing  conditions  of  existence 
can,  therefore,  have  no  such  sanction  for  large  masses  of  the  people  in 
societies  where  life  is  a  long  onerous  rivalry,  where  in  the  nature  of 
things  it  is  impossible  for  all  to  attain  success,  and  where  the  many  work 
and  suffer,  and  only  the  few  have  leisure  and  ease.  Regard  it  how  we 
may,  the  conclusion  appears  inevitable,  that,  to  the  great  masses  of 
the  people,  the  so-called  lower  classes,  in  the  advanced  civilisations  of 
to-day,  the  conditions  under  which  they  live  and  work  are  still  without 
any  rational  sanction.     .     .     . 

"The  evolutionist  may  be  convinced  that  what  is  called  the  exploita- 
tion of  the  masses,  is  but  the  present-day  form  of  the  rivalry  of  life  which 
he  has  watched  from  the  beginning,  and  that  the  sacrifice  of  some  in 
the  cause  of  the  future  interests  of  the  whole  social  organism  is  a  necessary 
feature  of  our  progress.    But  this  is  no  real  argument  addressed  to  those 


Bk.  I  Political  Progress  and  Reason  321 

who  most  naturally  object  to  be  exploited  and  sacrificed,  and  who  in 
our  modern  societies  are  entrusted  with  power  to  give  political  effect 
to  their  objections.  Science  may  be  painfully  convinced  that  the 
realisation  of  the  hopes  of  socialism  is  quite  incompatible  with  the 
ultimate  interests  of  a  progressive  society;  but  it  would  still  be  irrational 
to  expect  even  this  consideration  to  generally  affect  the  conduct  of  those 
who  are  concerned  not  with  the  problematic  interests  of  others  in  the 
distant  future,  but  %\'ith  their  own  interest  in  the  actual  present.  .  .  . 
The  voice  of  reason  could  hardly  find  fitter  utterance  than  in  the  words 
of  Professor  Huxley,  while  telling  us  that  at  best  our  civilisation  does 
not  embody  any  worthy  ideal,  or  possess  the  merit  of  stability,  he  does 
not  hesitate  to  further  express  the  opinion  that  'if  there  is  no  hope  of  a 
large  improvement  of  the  condition  of  the  greater  part  of  the  human 
family'  —  mark  the  uncomprising  sweep  of  the  words  —  he  would 
hail  the  advent  of  some  kindly  comet  to  sweep  it  all  away.  'What 
profits  it,'  he  asks  pertinently,  'to  the  human  Prometheus  that  he  has 
stolen  the  fire  of  heaven  to  be  his  servant,  and  that  the  spirits  of  the 
earth  and  the  air  obey  him,  if  the  vulture  of  Pauperism  is  eternally  to 
tear  his  very  vitals  and  keep  him  on  the  brink  of  destruction? '.     .     .     . 

"If  we  ask  ourselves,  therefore,  what  course  it  is  the  interests  of 
the  masses  holding  political  power  in  our  advanced  societies  to  pursue 
from  the  standpoint  of  reason,  it  seems  hardly  possible  to  escape  the 
conclusion  that  they  should  in  self-interest  put  an  immediate  end  to 
existing  social  conditions.  Man  in  these  societies  has  placed  an  impos- 
sible barrier  between  him  and  the  brutes,  and  even  between  him  and 
his  less  developed  fellow-creatures.  He  no  longer  fears  the  rivalry  or 
competition  of  either.     .     .     . 

"With  whatever  intention  the  evolutionist  may  set  out,  he  will  speed- 
ily discover,  if  he  carry  his  analysis  far  enough,  that  so  far  from  society 
existing  firmly  based  on  imiversal  logic  and  reason,  for  large  masses 
of  the  population,  alike  in  past  stages  of  our  history  and  in  the  midst 
of  the  highest  civilisations  of  the  present  day,  reason  has  been,  and 
continues  to  be,  unable  to  offer  any  sanction  for  the  prevailing  condi- 
tions of  life." 

These  are  the  lines  of  thought  along  which  the  mind  drifts  when 
occupied  with  the  social  and  political  significance  of  the  evolutionary 
sciences.  The  conclusions  are  suggested  that  progressive  political 
systems  are  not  only  provocative  of  unnecessary  social  evil,  but  founded 
upon  principles  devoid  of  any  rational  justification.  The  first,  because 


322  Progress  and  Politics  ,    Pt.  IV 

they  demand  the  unceasing  sacrifice  of  the  vital  welfare  of  the  majority 
of  their  constituent  individuals.  The  second,  because,  in  all  progressive 
Systems,  the  interests  of  the  system  and  those  of  the  majority  are  opposed; 
the  majority,  therefore,  can  have  no  interest  in  the  furtherance  of  pro- 
gressive political  systems. 

The  progressive  society  came  into  being  during  the  ages  of  man's 
savage  infancy;  its  objects  were,  and  still  are,  to  further  the  interests 
of  its  members,  to  protect  them  from  the  aggressions  of  other  societies 
and  dangerous  elements  within.  With  its  growth  as  a  social  and  polit- 
ical factor,  endless  questions,  problems,  and  complications,  both  within 
and  without  its  borders,  are  evblved,  resulting  in  present  highly  complex 
political  and  social  conditions.  These  conditions  involve  the  existence 
of  progressive  political  aggregates  with  conflicting  interests;  the  prog- 
ress of  one  demanding  its  development  in  relation  to  others  of  its  kind. 
This  progress  requires  the  subordination  of  individual  welfare  to  the 
progress  of  the  political  aggregate;  and  the  picture  presents  itself  of 
great  populations,  involving  hundreds  of  millions  of  individuals,  sacri- 
ficing their  real  and  vital  interests  for  the  purely  ideal  and  abstract 
interests  of  a  political  aggregate  called  a  State  or  a  Nation.  A  teeming 
mass  of  more  or  less  sentient  beings  separates  itself  into  imaginary 
portions,  by  means  of  trade  regulations  and  indirect  taxes;  and  creates, 
by  means  of  these  imaginary  divisions,  equally  imaginary  interests,  in 
conflict  with  other  interests  of  the  same  kind.  These  teeming  millions 
are  thus  occupied  in  sacrificing  their  vital  welfare  upon  the  altar  of  the 
abstract  and  unrealizable  interests  of  these  imaginary  subdivisions  of 
their  number,  called  this  or  that  State,  Nation  or  Empire.  It  may  thus 
appear  that  the  elimination  of  these  fictitious  distinctions  between  pro- 
gressive political  aggregates  would  eliminate  artificial  or  imaginary 
interests  conflicting  with  the  real  and  vital  interests  of  individuals. 
Where  there  exists  no  artificially  sustained  conflict  of  interests,  based 
upon  the  imaginary  interests  of  progressive  aggregates,  the  real 
and  vital  welfare  of  existing  human  beings,  of  real  living  men 
and  women,  becomes  the  end  toward  which  social  and  political  activity 
should  be  directed,  and  not  that  of  an  imaginary  progressive  abstraction. 
That  the  furtherance  of  actual  individual  lives,  and  not  the  interests 
of  fictitious  aggregates,  is  the  proper  ultimate  end  of  social  effort,  Mr. 
Spencer  1  points  out:  "So  long  as  the  existence  of  a  community  is 
endangered  by  the  actions  of  communities  around,  it  must  remain  true 

>  Data  of  Ethics,  §  49,  p.  134. 


Bk.  I  Political  Progress  and  Reason  323 

that  the  interests  of  individuals  must  be  sacrificed  to  the  interests  of  the 
community,  as  far  as  is  needful  for  the  community's  salvation.  But  if 
this  is  manifest,  it  is,  by  implication,  manifest,  that  when  social  antago- 
nisms cease,  this  need  for  sacrifice  of  private  claims  to  public  claims  ceases 
also;  or  rather,  there  cease  to  be  any  public  claims  at  variance  with 
private  claims.  All  along,  furtherance  of  individual  lives  has  been  the 
ultimate  end;  and  if  this  ultimate  end  has  been  postponed  to  the  proxi- 
mate end  of  preserving  the  community's  life,  it  has  been  so  only  because 
this  proximate  end  was  instrumental  to  the  ultimate  end.  When  the 
aggregate  is  no  longer  in  danger,  the  final  object  of  pursuit,  the  welfare 
of  the  units,  no  longer  needing  to  be  postponed,  becomes  the  immediate 
object  of  pursuit." 

The  distinction  between  the  interests  of  a  political  aggregate,  and 
those  of  its  constituent  units,  may  be  made  clear  through  other  considera- 
tions, dealing  with  the  internal  rather  than  the  external  organization 
of  progressive  systems.  Political  conceptions  underlying  the  organi- 
zation of  the  ancient  State,  present  a  condition  of  society  in  which  the 
competitive  process  was  continued  among  families,  clans  or  groups, 
rather  than  among  the  constituent  individuals.  A  change  has  occurred 
with  changing  conditions,  giving  rise  to  altered  conceptions  of  legislative 
and  political  principles.  These  changes  have,  however,  in  no  way  dimin- 
ished the  fundamental  rivalry  and  sacrifice  to  which  progress  is  due. 
On  the  contrary,  the  wider  the  field  open  to  competitive  influences, 
the  greater  seems  to  be  their  intensity.  "The  movement  of  the  pro- 
gressive societies  has  been  uniform  in  one  respect,"  says  Sir  Henry 
Maine, ^  "Through  all  its  course  it  has  been  distinguished  by  the  gradual 
dissolution  of  family  dependency,  and  the  growth  of  individual  obliga- 
tion in  its  place.  The  Individual  is  steadily  substituted  for  the  Family, 
as  the  unit  of  which  civil  laws  take  account." 

The  existing  members  of  a  community,  through  the  legal  and  con- 
stitutional form  of  the  social  organization,  thus  enter  into  agreement; 
not  only  with  each  other,  but  extend  the  terms  of  the  contract,  inherited 
from  the  dead,  through  an  indefinite  series  of  future  generations.  Society, 
and  especially  progressive  society,  might  thus  be  regarded  as  a  partner- 
ship extending  over  an  indefinite  number  of  generations,  and  existing 
between  the  dead,  the  living,  and  those  yet  to  be. 

This  partnership  can  have  but  one  rationally  intelligible  object  —  the 
furtherance  of  the  interest  of  the  majority  involved;  or,  as  usually 

'  Ancient  Law,  p.  i68. 


324  Progress  and  Politics  Pt.  IV 

stated,  the  furtherance  of  the  "interests  of  the  community."  The  words 
"interests  of  the  community"  form  one  of  the  most  familiar  terms  met 
in  political  and  economic  discussion.  Few  terms,  however,  are  less 
explicit  in  their  meaning,  less  carefully  used,  or  more  open  to  miscon- 
ception. Bentham,^  advances  the  apparently  axiomatic  proposition 
that  the  interest  of  the  community  is  "the  sum  of  the  interests  of  the 
several  members  who  compose  it."  Such  is  doubtless  the  conventionally 
recognized  significance  of  the  term,  yet,  studied  in  the  light  of  the  evolu- 
tionary sciences,  the  interest  of  the  fictitious  political  aggregate,  or  of 
the  progressive  community,  not  only  is  not,  but  never  can  be,  the  sum 
of  the  interests  of  its  units.  A  community,  or  a  political  society, 
represents,  not  only  the  individual  units  existing  at  any  moment,  but  that 
series  of  generations  of  individuals  coming  under  its  influence  daring 
the  entire  period  of  its  activity.  Progressive  conditions  involve  the 
subordination,  and  not  the  furtherance,  of  the  interests  of  the  vast 
majority  of  individuals  forming  these  series  of  generations.  The  inter- 
ests of  the  progressive  community,  therefore,  and  the  interests  of  the 
overwhelming  majority  of  its  units,  are  not  only  not  the  same,  but 
antagonistic. 

A  community,  or  a  political  society,  is  a  symbol,  an  abstraction,  rep- 
resenting the  dead,  the  living,  and  generations  yet  to  be.  It  is  an 
ideal  conception  representing  extinct  societies;  such  as  the  ancient 
Roman  and  Persian  empires,  or  those  at  present  in  existence  in  Europe  or 
America.  Abstract  conceptions  of  this  kind  can  never  possess  any 
specific  concrete  existence.  A  symbol  called  a  State,  or  an  Empire, 
represents  a  series  of  generations  living  under  certain  laws  and 
taxes,  and  cannot  possess  a  conscious  existence  of  its  own.  Exist- 
ing, living,  human  beings,  therefore,  who  sacrifice  their  vital  wel- 
fare for  that  of  a  symbol  representing  a  progressive  series  of  gen- 
erations, prostrate  themselves  apparently  before  a  figment  of  their 
imagination. 

This  fact  is  presented  with  added  force  when  the  fossilized  remains  of 
extinct  species  are  examined.  Were  their  entire  record  available,  their 
history  could  doubtless  be  traced  from  the  mom^ent  of  their  first  char- 
acteristic modifications,  through  the  entire  progressive  process  of  de- 
velopment and  decline.  It  has  been  seen,  under  what  conditions,  and 
through  what  constant  individual  sacrifice,  this  progress  was  maintained; 
and,  when  the  species  has  ceased  to  exist,  as  all  species  must,  it  may  well 

*  Principles  of  Morals  and  Legislation,  p.  3- 


Bk.  I  Political  Progress  and  Reason  325 

be  asked  how  the  majority  of  its  units  were  benefited  by  the  progressive 
struggle. 

"We  are  told,"  says  Professor  Huxley,*  "to  take  comfort  from  the 
reflection  that  the  terrible  struggle  for  existence  tends  to  final  good,  and 
that  the  suffering  of  the  ancestor  is  paid  for  by  the  increased  perfection 
of  the  progeny.  There  would  be  something  in  this  argument  if,  in 
Chinese  fashion,  the  present  generation  could  pay  its  debts  to  its  an- 
cestors; otherwise  it  is  not  clear  what  compensation  the  Eohippus  gets 
for  his  sorrows  in  the  fact  that,  some  millions  of  years  afterward,  one 
of  his  descendants  wins  the  Derby." 

Such  considerations  need  not  appear  as  idle  speculations  without 
application  to  human  society.  An  extinct  species  is  analogous  in  its 
process  of  evolution  to  an  extinct  empire,  and  it  may  be  asked  of  what 
practical  benefit  was  the  progress  of  Rome  to  the  majority  of  her  citizens, 
to  the  men  whose  bones  whitened  upon  barbarian  deserts  or  who 
joined  the  corn-fed  rabble  in  order  that  the  land  of  Italy  might  be 
concentrated  in  slave-worked  latifundia,  that  a  Verres  or  a  Dolabella 
make  sport  of  the  resources  of  subject  peoples,  and  Hun  and  Vandal 
revel  on  the  grave  of  a  decaying  world? 

Applied  to  the  present  these  considerations  suggest  that  existing 
generations  have  no  more  interest  in  the  progress  of  the  future  than  the 
Eohippus  of  Professor  Huxley  in  the  triumph  of  the  Derby  winner  of 
yesterday.  The  bulk  of  real  men  and  women,  under  this  or  that  pro- 
gressive administrative  system,  have  no  more  personal  interest  in  the 
support  of  such  a  system  than  the  hungry  Roman  rabble  in  the  triumphs 
of  an  Africanus,  or  in  the  later  triumph  of  the  sword  of  the  barbarian. 
Purely  altruistic  considerations  lead  to  identical  conclusions;  for,  with 
future  progress  is  involved,  not  only  the  sacrifice  of  the  interests  of  the 
majority  of  existing  individuals,  but  of  future  generations. 

From  the  point  of  view  established  by  the  evolutionary  sciences, 
utilitarian  considerations  unite  with  those  of  a  purely  altruistic  nature, 
in  questioning  the  utility  of  politico-progressive  conditions. 

1  Evolution  and  Ethics,  pp.  198, 199. 


Book  II 

INTELLECTUAL    PROGRESS 
CHAPTER  I 

THE    GREAT   MAN 

POLITICAL    and   economic   considerations,   based    upon   the 
evolutionary  sciences,  are  of  interest  or  the  reverse,  in  pro- 
portion to  the  social  significance  lent  to  the  latter.    To  some 
inquirers   they   appear   of   value;   others,    while    admitting 
their  truth,  fail  to  perceive  their  available  application  to  human  so- 
ciety. 

The  evolutionary  sciences  may  be  regarded  as  the  final  source 
of  information  with  reference  to  progressive  conditions  involving 
indefinite  periods  of  time;  but,  on  another  hand,  there  are  impor- 
tant factors  in  human  development  relatively,  if  not  actually, 
independent  of  their  influence.  These  factors  act  within  appre- 
ciable periods,  with  infinitely  greater  rapidity,  and  thus  possess  a 
significance  not  to  be  lent  to  biological  generalizations.  From 
this  attitude,  the  positions  of  Darwin  and  Weismann  may  be  read- 
ily admitted  and  as  readily  ignored.  The  progress  concerning  present 
human  populations,  or  the  next  score  or  so  of  the  generations  of 
men,  it  may  be  said,  is  not  evolutionary  or  naturally  selective  prog- 
ress, but  social,  industrial  and  intellectual  progress.  The  influences 
which  guided  the  physical  modifications  of  the  eohippus  or  the 
ictheosaurus,  or  even  of  man  in  his  prehistoric  condition,  do  not 
apply  to  civilized  man  in  any  immediate  sense.  The  real  struggle,  the 
real  "survival  of  the  fittest"  in  civilized  society,  takes  place  in  a  sphere 
of  activity  distantly  removed  from  Spencerian  generalizations  with 
reference  to  "ruminant"  and  "carnivora."  Progress,  for  man  of  the 
twentieth  century,  is  largely  removed  from  the  field  of  biological  inquiry 
and  a  physico-selective  process  based  upon  a  struggle  for  animal  sub- 
sistence. Progress,  from  this  point  of  \aew,  becomes  intellectual  rather 
than  biological,  psychical  rather   than  physical;  and,  consequently, 

326 


Bk.  II  The  Great  Man  327 

neither  considerations  based  upon  economic  grounds,  nor  biological 
generalizations,  form  the  positions  from  which  it  may  most  profitably 
be  studied. 

Several  writers  have  presented  studies  of  progress  in  this  light,  among 
which  may  be  mentioned  Mr.  Mallock's  Aristocracy  and  Evolution. 
Mr.  Mallock  not  only  presents  the  subject  from  what  might  be  called 
the  ultra-biological  attitude,  but  some  instructive  criticism  of  the  posi- 
tions of  Mr.  Kidd,  Mr.  Spencer,  Mr.  Webb  and  others.  Mr.  Mallock's 
thesis  is,  that  progress,  as  it  concerns  civilized  man  to-day,  is  the  result  of 
forces  independent  of  physico-biological  conditions  and  dependent  upon 
intellectual  influences  exerted  over  their  fellows  by  men  of  superior 
mental  attainments.  The  Aristocracy  of  Mr.  Mallock  consists  of  those 
individuals  possessing  intellectual  powers  above  the  average.  The 
"great  man"  is  the  man  capable  of  exerting  intellectual  dominion;  and, 
as  Mr.  Mallock^  says,  "the  great  man,  as  here  understood,  does  not  in 
any  way  correspond  to  the  fittest  man  in  the  Darwinian  struggle  for  exist- 
ence. The  fittest  man  in  the  Darwinian  sense  merely  promotes  prog- 
ress by  the  physiological  process  of  reproducing  his  slight  superiorities 
in  his  children,  and  thus  raising  in  the  slow  course  of  ages  the  general 
level  of  capacity  throughout  subsequent  generations  of  his  race.  The 
great  man,  on  the  contrary,  promotes  progress,  not  because  he  raises 
the  capacity  of  the  generations  that  come  after  him,  but  because  he  rises 
individually  above  the  general  level  of  his  own."  .  .  .  "The 
great  man,  as  an  agent  of  progress,  shows  his  greatness  in  a  way  pre- 
cisely opposite  to  that  in  which  the  fittest  man  shows  his  fitness.  This 
it  is  that  our  contemporary  sociologists  all  fail  to  perceive,  and  endless 
error  is  the  consequence.  The  great  man,  unlike  the  strongest  lion, 
promotes  progress  by  increasing  the  food-supply  not  of  himself,  but  of 
others;  or  if  he  increase  his  own,  as  he  no  doubt  generally  does,  he  does 
so  only  by  showing  others  how  to  increase  theirs.  He  is  like  a  lion  who 
should  be  better  fed  than  the  rest  of  the  lions  in  his  region,  not  because 
he  took  a  carcass  from  them  for  which  they  all  were  fighting,  but  because 
he  showed  them  how  to  find  others  which  they  never  would  have  found 
unaided,  and  took  for  himself  in  payment  a  small  portion  of  each." 
Mr.  Mallock  says^  in  another  suggestive  passage:  "And  what  is  true 
of  the  struggle  which  produces  industrial  progress  is  true  of  that  which 
produces  progress  of  all  other  kinds.     Scientific  knowledge  increases  in 


'  Aristocracy  and  Evolution,  pp.  130-131. 
^  Ibid.,  pp.  146-147. 


328  Intellectual  Progress  Pt.  IV 

proportion  as  those  exceptional  individuals  whose  studies  have  brought 
them  most  near  to  the  truth  are  able  to  fight  down  the  opinions  of  the 
exceptional  individuals  who  differ  from  them,  and  to  impress  their 
own  undisputed  upon  the  world.  Such  knowledge  does  not  increase 
on  account  of  any  struggle  amongst  the  learners,  which  causes  some  of 
them  to  become  more  and  more  apt  in  learning.  It  grows  on  account 
of  a  struggle  between  philosophers,  each  of  whom  aims  at  settling  what 
the  learners  shall  learn.  And  with  regard  to  religion  and  politics  the  case 
is  just  the  same.  The  progressive  struggle  is  primarily  between  rival 
prophets  and  politicians.  The  spread  of  Christianity,  for  instance,  was 
not  brought  about  by  Christian  races  exterminating  those  that  were  not 
Christians.  It  was  brought  about  by  Christian  thinkers  and  teachers 
discrediting  the  doctrines  taught  by  thinkers  and  teachers  who  were 
opposed  to  them.  Free-trade  again,  in  this  country,  has  not  triumphed 
over  protectism,  because  the  mass  of  free-traders  have  exterminated  that 
mass  of  protectionists.  It  has  triumphed  simply  because,  in  the  eyes  of 
the  majority,  one  school  of  theorists  has  succeeded  in  discrediting  another. 

"Now  these  facts,  which,  when  once  stated,  are  so  obvious,  not  only 
throw  the  Darwinian  struggle  for  existence  altogether  into  the  back- 
ground as  an  agent  in  social  progress,  but  they  show  that  it  presents  us 
with  no  true  analogy  to  that  kind  of  struggle  from  which  progress 
principally  results.  They  show  us,  on  the  contrary,  that  the  struggle 
which  produces  social  progress,  though  it  resembles  the  Darwinian 
struggle  in  one  point,  is  in  all  other  points  contrasted  with  it." 

Mr.  Mallock,  speaking  of  suggested  industrial  reforms,  concludes  as 
follows: 

"Nowhere  is  the  impossibility  of  such  changes  more  clearly  indicated 
than  in  the  phrases  now  most  frequently  used  to  indicate  their  specific 
nature  —  such  phrases  as  'the  emancipation'  and  'the  economic  freedom' 
of  the  labourer.  These  phrases,  if  they  have  any  meaning  at  all,  can 
mean  one  thing  only  —  the  emancipation  of  the  average  man,  endowed 
with  average  capacities,  from  the  control,  from  the  guidance,  or,  in  other 
words,  from  the  help,  of  any  man  or  men  whose  capacities  are  above  the 
average  —  whose  speculative  abilities  are  exceptionally  keen,  whose 
inventive  abilities  are  exceptionally  great,  whose  judgments  are  ex- 
ceptionally sound,  and  whose  powers  of  will,  enterprise,  and  initiative 
are  exceptionally  strong.  That  is  to  say,  these  phrases,  if  they  have  any 
meaning  at  all,  mean  the  deliberate  loss  and  rejection,  by  the  less 
efficient  majority  of  mankind,  of  any  advantage  that  might  come  to  it 


Bk.  II  The  Great  Man 


329 


from  the  powers  of  the  more  efficient  minority.  ^Economic  freedom,^ 
in  fact,  would  mean  economic  poverty;  and  the  '  emancipation '  of  the 
average  man  would  merely  be  the  emancipation  which  a  blind  man 
achieves  when  he  breaks  away  from  his  guide.  The  human  race  pro- 
gresses because  and  when  the  strongest  human  powers  and  the  highest 
human  faculties  lead  it;  such  powers  and  faculties  are  embodied  in  and 
monopolised  by  a  minority  of  exceptional  men;  these  men  enable  the 
majority  to  progress,  only  on  condition  that  the  majority  submit 
themselves  to  their  control;  and  if  all  the  ruling  classes  of  to-day 
could  be  disposed  of  in  a  single  massacre,  and  nobody  left  but  those 
who  at  present  call  themselves  the  workers,  these  workers  would  be 
as  helpless  as  a  flock  of  shepherdless  sheep,  until  out  of  themselves  a 
new  minority  had  been  evolved,  to  whose  order  the  majority  would 
have  to  submit  themselves,  precisely  as  they  submit  themselves  to 
the  orders  of  the  ruling  classes  now,  and  whose  rule,  like  the  rule  of  all 
new  masters,  would  be  harder,  and  more  arbitrary,  and  less  human 
than  the  rule  of  the  old." 

This  position  may  be  briefly  formulated  as  follows: 

(i)  The  conclusions  of  the  physical  sciences  are  of  slight  importance 
in  connexion  with  modern  progressive  society,  inasmuch  as  the  human 
competitive  process  is  carried  on  in  an  intellectual  rather  than  in  a 
physical  world.  (2)  Progress,  in  its  practical  and  determinable  sense, 
is  largely,  if  not  entirely,  due  to  the  capacity  of  society  to  receive  and 
perpetuate  intellectual  impressions  from  men  of  superior  endowments. 
(3)  Any  form  of  social  and  political  organization  which  relaxes  the 
rivalry  and  incentive  to  development  among  the  superior  intellects, 
and,  at  the  same  time,  the  capacity  of  the  society  for  the  reception  and 
application  of  the  results  of  their  activities,  must  tend  to  check  intellectual 
progress  —  by  far  the  most  important  progress  affecting  civilized  man. 

This  position  is  of  interest.  Mr.  Mallock's  remark  may  be  recalled, 
to  the  effect  that  if  the  intellectually  inferior  mass  ever  freed  itself  from 
one  form  of  intellectual  dominion,  it  would  but  evolve  other  dominant 
elements  from  within  itself  and  continue  the  process  of  the  past. 

If  this  position  is  regarded  as  final,  it  may  seem  impossible  to 
check  the  competitive  struggle  among  the  intellectually  superior.  Under 
whatever  form  human  society  may  be  organized,  the  superior  will 
always  dominate  by  the  inherent  right  of  their  superiority. 

History,  everywhere, shows  man,  the  aggregate,dominatedbyman,the 
individual;  shows  that  the  Many  are  not  only  at  the  mercy  of  the  Few, 


330  Intellectual  Progress  Pt.  IV 

politically;  but  owe  the  conditions  of  their  existence,  mental  and  phys- 
ical, the  very  action  of  their  faculties,  to  that  most  powerful  and  ex- 
clusive of  all  aristocracies  —  the  aristocracy  of  the  intellect.  The 
aristocrats  of  the  intellect  generate  the  power  that  keeps  the  wheels  of 
society  revolving  upon  their  course.  They  rule  in  spite  of  themselves, 
and  when  one  regime  is  overthrown,  the  great  wheels  but  make  another 
revolution  and  move  as  wills  the  strongest. 

This  intellectual  aristocract,  this  "great  man"  of  Mr.  Mallock,  is  the 
Uebermensch  of  Nietzsche,  the  Superman  of  what  might  be  called 
idealistic  Darwinism.  This  is  the  man  who  possesses  the  intellectual 
birthright  and  the  power  to  wield  the  wills  of  other  men  —  the  man  who 
can  force  other  men  to  think  in  terms  of  his  own  thought.  Briefly 
expressed,  this  position  is,  that  the  earth  and  all  it  contains,  by  natural 
law  and  natural  right,  belong  to  those  who  can  take  it;  to  dispute  them 
is  folly;  they  are  their  own  justification,  and  enforce  their  own  decrees. 
An  ideal  realm  of  intellect  is  here  opened  —  a  realm  in  which  the  Super- 
men strive  and  wrestle  in  higher  spheres  of  thought  for  the  dominion 
of  the  world. 

The  Supermen  here  come  into  view;  in  other  words,  the  dominant 
forces  in  intellectual  movement.  A  study  of  these  involves  an  outline 
of  intellectual  history. 


CHAPTER  II 

THE    LAW    or    INTELLECTUAL   PROGRESS 

Section  I  —  Method  of  Inquiry.    Section  II  —  Art. 


Section  I — Method  of  Inquiry 

A  S  THE  astronomical  empyrean    may  be    analyzed   by    means 
/%       of  spherical  sections,  degrees  and  minutes,  the  intellectual 
/    ^    firmament  may  be  made  subject  to  a  process  of  inclusive 
classification.    The  areas  within  which  the  intellectual  move- 
ments of  man  have  taken  place  are:  the  Arts,  Science,  Philosophy,  and 
Religion.     These  four  areas  will,  therefore,  be  briefly  reviewed.    The 
following  passages  from  the  pen  of  Sir  Henry  Maine ^  is  of  interest  in 
such  inquiry: 

"Mr.  Tylor  has  justly  observed  that  the  true  lesson  of  the  new  science 
of  Comparative  Mythology  is  the  barrenness  in  primitive  times  of  the 
faculty  which  we  most  associate  with  mental  fertility,  the  Imagination. 
Comparative  Jurisprudence,  as  might  be  expected  from  the  natural 
stability  of  law  and  custom,  yet  more  strongly  suggests  the  same  in- 
ference, and  points  to  the  fewness  of  ideas  and  the  slowness  of  additions 
to  the  mental  stock  as  among  the  most  general  characteristics  of  mankind 
in  its  infancy. 

"The  fact  that  the  generation  of  new  ideas  does  not  proceed  in  all 
states  of  society  as  rapidly  as  in  that  to  which  we  belong  is  only  not 
familiar  to  us  through  our  inveterate  habit  of  confining  our  observation 
of  human  nature  to  a  small  portion  of  its  phenomena.  When  we  under- 
take to  examine  it,  we  are  very  apt  to  look  exclusively  at  a  part  of 
Western  Europe  and  perhaps  of  the  American  Continent.  We  con- 
stantly leave  aside  India,  China,  and  the  whole  Mahometan  East. 
This  limitation  of  our  field  of  vision  is  perfectly  justifiable  when  we  are 
occupied  with  the  investigation  of  the  laws  of  Progress.  Progress  is, 
in  fact,  the  same  thing  as  the  continued  production  of  new  ideas,  and  we 

>  Early  History  of  Institutions,  pp.  225-230,  cited  by  the  author  in  Popular  Government,  pp.  i90-ig4. 

33i 


332  Intellectual  Progress  Pt.  IV 

can  only  discover  the  law  of  this  production  by  examining  sequences  of 
ideas  where  they  are  frequent  and  of  considerable  length.  But  the 
primitive  condition  of  the  progressive  societies  is  best  ascertained  from  the 
observable  condition  of  those  which  are  non-progressive;  and  thus  we 
leave  a  serious  gap  in  our  knowledge  when  we  put  aside  the  mental 
state  of  the  millions  upon  millions  of  men  who  fill  what  we  vaguely  call 
the  East  as  a  phenomenon  of  little  interest  and  no  instructiveness. 
The  fact  is  not  unknown  to  most  of  us  that,  among  these  multitudes, 
Literature,  Religion,  and  Art  —  or  what  corresponds  to  them  —  move 
always  within  a  distinctly  drawn  circle  of  unchanging  notions;  but  the 
fact  that  this  condition  of  thought  is  rather  the  infancy  of  the  human 
mind  prolonged  than  a  different  maturity  from  that  most  familiar  to 
us,  is  very  seldom  brought  home  to  us  with  a  clearness  rendering  it 
fruitful  of  instruction. 

"  I  do  not,  indeed,  deny  that  the  difference  between  the  East  and  the 
West,  in  respect  of  the  different  speed  at  which  new  ideas  are  produced,  is 
only  a  difference  of  degree.  There  were  new  ideas  produced  in  India 
even  during  the  disastrous  period  just  before  the  English  entered  it, 
and  in  the  earlier  ages  this  production  must  have  been  rapid.  There 
must  have  been  a  series  of  ages  during  which  the  progress  of  China  was 
very  steadily  maintained,  and  doubtless  our  assumption  of  the  absolutely 
immobility  of  the  Chinese  and  other  societies  is  in  part  the  expres- 
sion of  our  ignorance.  Conversely,  I  question  whether  new  ideas  come 
into  being  in  the  West  as  rapidly  as  modern  literature  and  conversation 
sometimes  suggest.  It  cannot,  indeed,  be  doubted  that  causes,  unknown 
to  the  ancient  world,  lead  among  us  to  the  multiphcation  of  ideas. 
Among  them  are  the  never-ceasing  discovery  of  new  facts  of  nature, 
inventions  changing  the  circumstances  and  material  conditions  of  life, 
and  new  rules  of  social  conduct;  the  chief  of  this  last  class,  and  certainly 
the  most  powerful  in  the  domain  of  law  proper,  I  take  to  be  the  famous 
maxim  that  all  institutions  should  be  adapted  to  produce  the  greatest 
happiness  of  the  greatest  number.  Nevertheless,  there  are  not  a  few 
signs  that  even  conscious  efforts  to  increase  the  number  of  ideas  have 
a  very  limited  success.  Look  at  Poetry  and  Fiction.  From  time  to  time 
one  mind  endowed  with  the  assemblage  of  qualities  called  genius  makes 
a  great  and  sudden  addition  to  the  combination  of  thought,  word,  and 
sound  which  it  is  the  province  of  those  arts  to  produce;  yet  as  suddenly, 
after  one  or  a  few  such  efforts,  the  productive  activity  of  both  branches 
of  invention  ceases,  and  they  settle  down  into  imitativeness  for  perhaps  a 


Bk.  II  The  Law  of  Intellectual  Progress  333 

century  at  a  time.  An  humbler  example  may  be  sought  in  rules  of 
social  habit.  We  speak  of  the  caprices  of  Fashion;  yet,  on  examining 
them  historically,  we  find  them  singularly  limited,  so  much  so,  that  we 
are  sometimes  tempted  to  regard  Fashion  as  passing  through  cycles  of 
form  ever  repeating  themselves.  There  are,  in  fact,  more  natural 
limitations  on  the  fertility  of  intellect  than  we  always  admit  to  ourselves, 
and  these,  reflected  in  bodies  of  men,  translate  themselves  into  that 
weariness  of  novelty  which  seems  at  intervals  to  overtake  whole  Western 
societies,  including  minds  of  every  degree  of  information  and  cultivation." 

This  passage  formulates  that  in  which  intellectual  progress  consists, 
and  the  method  of  developing  the  law  of  that  progress.  "Progress," 
says  this  trained  observer,  "is  the  continued  production  of  new  ideas; 
and  we  can  only  discover  the  law  of  this  production  by  examining  se- 
quences of  ideas  where  they  are  frequent  and  of  considerable  length." 

It  is  difficult  to  reduce  inquiry  with  reference  to  intellectual  progress 
to  more  clearly  defined  considerations  than  these.  Intellectual  prog- 
ress is  inconceivable  in  any  form  other  than  in  that  of  the  continuous 
production  of  new  ideas;  and  the  law  of  that  progress  can  be  discovered 
but  in  an  analysis  of  these  ideal  sequences.  For  the  present  purpose, 
no  voluminous  mass  of  material  need  be  presented.  The  movement 
alone  of  the  sequences  is  considered.  The  endless  imitations,  repe- 
titions and  reproductions  to  which  they  have  given  birth  are  of  no  im- 
portance in  this  movement.  The  revolutions  of  the  satellites  of  any 
heavenly  body  are  of  minor  interest,  or  readily  determined,  once  the 
movement  of  the  sphere  round  which  they  revolve  is  understood.  The 
attention,  therefore,  will  be  directed  to  the  movement  of  the  various 
ideal  sequences  within  the  most  important  fields  of  intellectual  activity, 
for  tihe  purpose  of  discovering,  if  possible,  the  law  of  their  development. 

Section  II  —  Art 
A  riicle   i  —  Classification . 

Art  as  here  understood  embraces  that  portion  of  intellectual  pro- 
duction not  included  within  philosophy,  religion,  or  scientific  inquiry. 
This  region  may  be  divided  into  five  fields:  I.  The  arts  of  De- 
sign, or  Architecture.  II.  Sculpture.  III.  Painting.  IV.  Music.  V. 
Poetry,  considered  in  its  widest  interpretation. 

These  fields  include  those  sequences  of  ideas  coming  within  the  domain 
of  Art.    As  the  history  of  these  is  developed,  age  after  age,  it  seems 


334  Intellectual  Progress  Pt.  IV 

that  even  in  the  realm  of  the  purely  ideal,  is  found  the  process  of 
evolution  and  devolution,  of  which  all  phenomena  seem  but  varying 
phases.  As  these  five  regions  are  examined,  and  as  the  essential  ideas 
constituting  their  progressive  history  are  traced,  this  process  gradually 
comes  into  view. 

A  Hide   2  —  A  rchitecture. 

The  great  art  of  structural  design,  to  which  so  much  of  beauty  and 
interest  in  human  expression  may  be  traced,  in  all  likelihood  owes  its 
primitive  origin  to  the  idea  of  shelter,  or  convenience.  As  these  humble 
needs  were  satisfied,  the  art  itself  became  of  more  importance,  was  used 
for  other  purposes,  and  developed  under  the  influence  of  radically 
distinct  ideas.  From  its  earliest  manifestations,  a  distinction  may  be 
observed  between  the  Arts  of  the  East  and  the  West.  The  first  has 
given  rise  to  many  varied  and  beautiful  conceptions,  but  it  is  rather 
in  the  West  that  occurs  the  most  progressive  and  intellectual  develop- 
ment. 

From  the  tombs  and  temples  of  the  earliest  civilizations;  from  the 
monuments  of  Assyria  and  Egypt,  and  notably  from  Persepolis, 
Beni  Hassan,  and  the  Rameseum,  were  evolved  the  exquisite  pro- 
portions of  the  orders  of  the  Greeks.  From  these  again,  under 
the  influence  of  Rome,  through  the  media  of  amphitheatre,  coliseum 
and  basilica,  new  conceptions  came  into  being,  and  new  ideas  were 
produced. 

Mediaeval  Christianity  poured  a  wealth  of  fresh  forms  into  archi- 
tectural art  through  the  spiritual  elegance  of  Gotliic  design.  These, 
in  turn,  fade  or  blend  with  the  growing  vitality  of  the  Renaissance, 
and  again  new  decorative  ideas  crystallize  around  the  palace  or  the 
dome.  Progress  during  all  these  periods  is  everywhere  manifest. 
The  sequences  of  new  ideas  never  cease,  or  cease  but  to  begin  anew 
with  greater  variety  and  fecundity.  Decorative  ideas  are  constantly 
brought  into  being,  and  laid  at  the  foundations  of  subsequent  prog- 
ress. 

From  Italy  the  Renaissance  spread  its  revivifying  influences  over 
Europe  and  notably  into  France,  where,  under  Louis  XII,  Francis  I, 
Henry  II,  and  the  last  of  the  Bourbons,  it  received  its  most  productive 
development.  These  later  manifestations,  however,  great  as  is  their 
charm  and  interest,  were  as  progressive  forces  less  rich  and  fertile  than 
the  earlier.    The  progress  of  the  art  is  later  carried  on  with  lessened 


Bk.  II  The  Law  of  Intellectual  Progress  335 

vitality,  until,  after  the  sumptuous  dignity  of  Louis  XIV,  the  graceful 
efflorescence  under  Louis  XV,  and  the  formal  reaction  under  Louis 
XVI  and  the  Empire,  form  and  design  begin  to  repeat  themselves; 
and  any  development  of  the  art  in  any  sense  analogous  to  the  progress 
of  the  past  is  sought  in  vain. 

Production  to-day,  in  the  art  of  structural  design,  however  interesting 
and  distinguished  its  application,  seems  to  have  passed  the  creative 
period,  and  be  limited  to  the  application  of  decorative  conceptions 
evolved  in  a  more  progressive  age.  Says  Ferguson,^  in  this  connexion: 
"In  the  European  system  it  is  considered  more  essential  that  a  building, 
especially  in  its  details,  should  be  a  correct  copy  of  something  else, 
than  good  in  itself  or  appropriate  to  its  purpose."  Such  criticism  may 
appear  severe,  yet  it  is  impossible  to  find  in  the  recent  arts  of  design, 
in  whatever  field,  any  progressive  movement  analogous  to  the  great  or 
even  minor  creative  periods  of  the  past.  But,  it  may  be  said,  the 
human  mind  is  finite  and,  consequently,  cannot  produce  new  ideas  for- 
ever. A  time  must  appear  in  its  history  when  its  creative  capacity  is 
exhausted,  when  production  can  continue  but  through  the  repetition  of 
already  developed  conceptions.  When  such  a  period  is  reached,  it 
need  not  mean  that  the  mind  has  grown  less  fertile,  or  less  capable 
of  creative  effort,  but  that  the  possibilities  of  fertilization  no  longer 
exist:  in  other  words,  that  there  are  no  few  forms  capable  of  structural 
application  to  be  discovered.  When  such  a  period  occurs,  however, 
progress  is  at  an  end,  and  further  movement,  independent  of  repetition  ^ 
impossible.  The  most  characteristic  architectural  efforts  of  the  present 
are  probably  found  in  the  field  of  purely  utilitarian  and  domestic  de- 
sign; the  tomb,  the  temple,  the  palace,  or  the  cathedral,  no  longer 
supply  the  creative  inspiration  of  an  earlier  day  or  when  attempted, 
strike  but  feeble  echoes  of  the  "frozen  music"  of  the  past. 

Thus  the  sequence  of  ideas  underlying  the  progressive  development 
of  the  arts  of  design  suggests  a  cycle,  as  it  were,  of  structural  motives; 
a  cycle  starting  under  the  influence  of  a  given  idea  of  utility;  developing 
through  the  application  of  decorative  ideas;  giving  birth  to  thousands 
of  years  of  progressive  movement,  and  then  entering  upon  a  period  of 
sterile  repetition,  the  dominant  idea  of  which  seems  to  have  returned  to 
the  starting  point  —  utilitarian  convenience.  A  series  of  ideas  is  found 
representing  a  process  of  slow  movement,  a  zenith  reached  on  the  shores 
of  the  Mediterranean,  rapid  progress  in  other  directions,  and  then  rever- 

'  History  of  Indian  and  Eastern  Architecture,  pp.  s,  6. 


336  Intellectual  Progress  Pt.  IV 


sion 


and  repetition  all  along  the  line.    In  an  art  presenting  such  con- 
ditions progressive  movement  is  apparently  exhausted. 

Article  j  —  Sculpture. 

In  the  history  of  plastic  and  lithic  expression  few  eflforts  of  importance 
occur  independently  of  architecture,  until  appear  the  sombre  creations 
of  Assyrian  and  Egyptian  civilization;  and  even  here  the  higher  forms  of 
sculpture  are  inextricably  involved  with  the  requirements  of  the  architect. 
The  earlier  Asiatic  and  Egyptian  elements  of  the  art  poured  into  Greece 
through  the  island  of  Crete  and  the  lion  gates  of  Mycenae,  to  burst  into 
independent  existence,  touched  with  the  magic  of  the  chisels  of  Phidias 
and  Praxiteles.  In  Greece  the  art  of  sculpture  reached  its  zenith.  No 
country  and  no  age  present  such  varied  and  articulate  lithic  beauty 
as  the  shores  dominated  by  the  spear  of  Athene  Promachos. 

In  every  art  certain  ideas  are  found  which  can  be  adequately  expressed 
but  through  the  media  of  the  art  in  question;  there  are  thus  ideas  capable 
of  formulation  through  plastic  representation  alone.  An  interesting  de- 
velopment of  such  ideas  occurred  during  the  most  important  periods  of 
Asiatic  and  European  civilization;  matured  and  culminated  with  these, 
and  then  entered  upon  the  apparently  inevitable  process  of  repetition  or 
ceased.  If  the  first  ideas  giving  rise  to  these  sequences  are  sought,  and 
the  view  extended  over  the  history  of  sculpture  as  a  whole,  it  may 
appear  that  nearly  all  expression  of  this  nature  originated  in  the  direct 
rendition  of  natural  forms,  suggesting  at  a  later  period  the  application 
of  these  to  monumental  and  architectural  design.  The  great  empires  of 
the  East  have  contributed  their  share  of  ideas  constituting  the  sculp- 
tural history  developed  under  their  influence,  until  the  sequence  is 
arrested  or  begins  to  repeat  itself.  On  turning  to  Greece,  however, 
and  regarding  Hellenic  sculpture  as  a  culmination  of  the  movements 
of  the  East,  it  may  seem  that  the  art  both  reached  its  zenith  and 
entered  upon  its  decline  under  the  shadow  of  the  Parthenon,  leaving 
little  to  do  for  those  who  come  after  but  to  worship  —  and  repeat. 
Rome  produces  imitations  alone;  but  the  Byzantine  and  early 
Gothic  eras  present  the  art  once  more  in  a  subordinate  but  still  vital 
movement.  This  line  of  development  gradually  exhausts  itself  in 
the  later  Middle  Ages,  when  the  great  Buonorotti  and  the  men  of 
the  Renaissance  turned  back  once  more  to  Greece  for  inspiration. 
This  period  is  peculiarly  rich  in  sculpture,  and  certain  new  ideas 
appear,  especially  in  monumental   and  architectural  applications  of 


Bk.  II  The  Law  of  Intellectual  Progress  337 

the  art.  Another  period  of  movement,  but  of  less  productive  vitality, 
may  be  traced  in  France  as  the  waves  of  the  Renaissance  roll  northward 
and  exhaust  themselves  beyond  the  Alps.  As  the  inspiration  of  the 
modern  Muse  is  studied,  however,  she  seems  no  longer  concerned  with 
ideas  such  as  have  given  rise  to  the  great  movements  of  the  past;  she 
is  no  longer  occupied  with  the  expression  of  religious  emotion,  trans- 
cendent efforts  to  attain  the  ideal,  or  even  with  the  humbler  office  of  the 
imitation  of  Greek  originals.  On  the  contrary,  her  chief  thought  seems  to 
be  the  expression  of  the  emotion  of  the  artist,  in  direct  contact  with 
external  nature,  rather  than  the  attempt  to  realize  any  purely  imagina- 
tive conceptions,  such  as  have  constituted  the  progressive  history  of  the 
art  in  the  past,  a  tendency  to  be  noted  even  in  monumental  and 
architectural  application.  Thus,  it  may  seem,  the  lithic  Muse  has 
turned  once  again  to  the  original  source  of  her  inspiration,  and  seeks  in 
direct  communion  with  nature  the  fullest  realization  of  her  being,  a 
tendency  scarcely  to  be  carried  farther  than  in  the  works  of  Rodin. 

Article  4  —  Painting. 

The  art  of  painting,  in  all  likelihood,  owes  its  origin  to  the  same  ideas 
to  which  the  art  of  sculpture  may  be  traced  —  direct  and  imimaginative 
rendition  of  natural  impressions  followed  by  architectural  application. 
In  the  East,  and  even  among  the  Greeks,  painting  seems  to  have  long 
remained  in  strict  subordination  to  architecture,  although  doubtless  car- 
ried to  degrees  of  perfection  of  which  nothing  is  known.  The  Chinese,  the 
Japanese,  and  the  Persians  of  a  later  day  developed  the  art  as  far  as  lay 
within  their  powers  and  then  began  to  repeat.  The  Byzantine  workers 
in  pigment  and  mosaic,  and  especially  the  earlier  Italian  masters,  de- 
velop new  progressive  periods  and  some  of  the  most  interesting  phases 
in  the  history  of  the  art.  These  epochs  fade  with  the  ages  which  gave 
them  birth,  while  the  art  meets  the  demands  of  another  period  and 
bursts  into  the  flower  of  the  "new  birth"  in  Italy.  To  the  painter  the 
names  of  Botticelli,  Pinturicchio,  Titian,  Veronese,  and  Raphael  each 
presents  a  new  and  distinct  conception,  an  independent  link  in  the  se- 
quence of  ideas  through  which  the  painter's  art  traces  its  progressive 
development.  In  the  men  of  that  day,  Italy  exhausts  herself,  and 
the  next  period  presents  but  repetitions.  The  seat  of  progress  moves 
to  the  northward,  where  Rembrandt,  Rubens  and  the  "divine"  Velas- 
quez add  their  sha-^e  to  the  sequence,  present  a  new  and  fresh  series 
of  conceptions,  endlessly  imitated  and  repeated  by  their  followers. 


338  Intellectual  Progress  Pt.  IV 

New  life  and  new  ideas  come  into  being  once  again,  however,  although 
with  lessened  power  and  fecundity.  The  sequence  is  continued  in 
France  by  Poussin  and  the  earlier  French  schools;  later  by  Delacroix, 
Millet,  and  the  men  of  1830.  England  presents  another  movement  of 
the  same  kind  with  Reynolds,  Gainsborough,  Constable,  and  others, 
together  with  the  beginning  of  conscious  repetition  in  the  Pre-Raphaelite 
movement  of  the  last  century.  These  latter  periods  of  development, 
in  whatever  country  they  may  be  traced,  lead  up  to  that  which  may  be 
regarded  as  the  characteristic  form  of  the  later  art  —  the  modern  land- 
scape. The  essential  idea  of  modern  painting  seems  to  be  the  rendition 
of  impressions  derived  directly  from  nature;  and  in  landscape  this  idea 
has  received  development  with  which  the  earlier  art  is  unfamiliar. 
Modern  landscape  painting,  in  some  of  its  higher  forms,  may  be 
regarded  as  presenting  works  of  art  little,  if  at  all,  inferior  to  those 
of  an  earlier  age.  It  may  seem,  however,  that  an  age  seeking  its 
characteristic  inspiration  in  the  reiteration  of  one  idea  scarcely  presents 
the  elements  essential  to  progress,  however  interesting  its  variations 
of  a  single  theme. 

The  artists  of  China  and  Japan,  the  Byzantine  workers,  the  early 
Florentine  masters,  the  works  of  Veronese,  Raphael,  Velasquez,  or 
again  the  works  of  Claude  and  Poussin,  each  suggest  a  distinct  ideal 
conception  in  this  field  of  expression.  These  sequences  of  ideas  present 
the  progressive  history  of  the  art;  and  where  they  stop,  it  seems  that 
progress  stops.  Progress  has  long  since  ceased  in  China,  Persia,  and 
Japan.  The  breath  of  the  Renaissance  has  long  since  ceased  to  inspire  a 
Titian  or  a  Tintoretto;  modern  painting  presents  no  movement  analogous 
to  the  great  creative  periods  of  the  past.  The  walls  of  a  modern  exhibi- 
tion may  often  be  divided  into  their  pictorial  elements;  all  the  ideas 
they  present  may  often  be  traced  to  their  sources  in  recalling  a  Botticelli 
in  Florence,  a  Veronese  or  a  Titian  in  Venice.  Or,  again,  these  elements 
may  act  through  a  process  of  double  dilution,  so  to  speak,  as  when  the 
thought  of  Luini  or  the  early  Italians  is  presented  upon  a  canvas  evi- 
dently inspired  by  the  scholarly  decorations  of  M.  Puvis  de  Chavannes; 
or  Japan  and  Velasquez  appear  filtered  through  impressions  derived 
from  the  interesting  personality  of  Mr.  Whistler.  Where  this  cannot 
be  done,  the  modern  Muse  seeks  her  inspiration  directly  from  nature. 
The  majority  of  modern  painters  would  perhaps  disclaim  any  creative 
or  imaginative  intention,  and  regard  nature  alone  as  their  highest  in- 
centive to  expression  and  "truth"  their  only  object.    If  this  is  so,  and 


Bk.  II  The  Law  of  Intellectual  Progress  339 

if  the  creative  and  decorative  conceptions  capable  of  pictorial  repre- 
sentation have  all  been  exploited,  as  it  would  seem  at  some  period  they 
must  necessarily  be,  it  may  seem  that  the  art  of  painting  is  following 
the  movement  traced  in  the  fields  of  architecture  and  sculpture.  In 
other  words,  that  painting  develops  a  sequence  of  progressive  ideas 
for  a  time,  and  when  these  are  exhausted  begins  to  repeat  itself  or  turn 
back  to  the  idea  from  which  it  took  its  rise  —  direct  rendition  of  natural 
impressions. 

Article  5  —  Music. 

Music  and  speech  seem  at  one  time  to  have  been  indistinguishable. 
Music  apparently  arose  from  what  might  be  called  cerebral,  or  verbal, 
expression  as  distinguished  from  expression  which,  in  the  course  of  time, 
has  become  characteristically  musical.  The  earliest  records  support 
this  view.  Says  Nauman^  with  reference  to  the  earliest  Chinese  music: 
"The  close  relationship  that  originally  existed  between  the  constitution 
of  the  state  and  music  is  also  clearly  shown  in  Chinese  history."  In 
connexion  with  early  Hindoo  music,  Bird  says:^  "Many  of  these 
Raginis  were  so  entirely  without  rhythmical  symmetry,  that  it  would  be 
almost  impossible  to  reproduce  them  in  the  same  form  as  they  were 
executed  by  the  Hindoo  singers;  they  seem  like  the  outpourings  of 
exalted  beings,  who  wed  to  words  such  sounds  as  their  emotion  or 
fancy  suggests."  "The  Egyptians  placed  their  music  in  close  affinity 
with  astronomy,  a  position  which  we  have  already  seen  it  occupy  among 
the  Chinese  and  Hindoos;  but  it  was  also  among  the  Greeks  that  this 
combination  attained  to  its  greatest  significance. "^  "The  word 
'Psalter'  means,  indifferently,  a  performance  on  a  stringed  instru- 
ment and  a 'sacred  hymn.' ^  .  .  .  "  The  musical  endowments  of  the 
Israelites  and  the  gift  of  prgphecy  were  intimately  associated  one  with 
another." 

The  earliest  records  present  music  as  an  essentially  dependent  art;  and, 
even  among  a  people  attaining  such  intellectual  heights  as  the  Greeks, 
music  seems  to  have  occupied  a  subordinate  relation  to  poetry.  "The 
Hellenes,"  says  Naumann^  "were  content  that  painting  should  remain  a 
mere  slavish  imitation  of  sculpture,  and  music  the  handmaid  of  poetry." 


1  The  History  of  Music,  p.  8. 
'  Ibid.,  pp.  24,  25. 
«  Ibid.,  p.  38. 
<  Ibid.,  p.  67 
'  Ibid.,  p.  116. 


340  Intellectual  Progress  Pt.  IV 

Such  dependence,  in  fact,  seems  a  necessity  before  the  discovery  of  the 
musical  system  underlying  modern  methods  of  composition  and  notation. 
The  very  late  period  at  which  a  method  was  devised  for  defining  the 
relative  length  of  musical  sounds  is  one  of  the  remarkable  facts 
in  the  progress  of  ideas  forming  musical  history.  Until  such  a 
system  was  formulated,  the  foundations  for  distinctly  musical  expression 
scarcely  existed.  These  foundations  once  established,  however,  music 
rapidly  developed  a  complete  and  independent  existence;  and  a  period 
of  remarkably  rich,  rapid,  and  productive  activity  is  entered.  As  in 
painting,  the  name  of  each  of  the  great  masters,  from  the  time  the  art 
became  independent  until  to-day,  suggests  some  distinctly  character- 
istic musical  idea  underlying  their  productions.  The  pages  of  musical 
history  are  filled  with  the  records  of  some  of  the  most  distinguished  and 
interesting  of  personalities. 

Recent  music,  however,  hardly  presents  a  progressive  and  creative 
movement  such  as  suggested  by  the  names  of  Bach,  Beethoven  or 
Berlioz.  On  the  contrary,  as  in  painting,  the  characteristically  modern 
music  seems  to  seek  its  inspiration  in  the  direct  statement  of  perceived 
fact  or  thought,  if  the  terms  are  permissible,  rather  than  in  the  ideal, 
melodic,  religious,  emotional,  dramatic,  intellectual  or  purely  scientific 
influences,  which  gave  birth  to  so  much  of  beauty  and  interest  in  the 
past.  The  pure  intellectuality  of  Bach,  the  "power  that  makes  for 
righteousness"  of  Beethoven,  the  spiritual  beauty  of  Brahms,  the  melodic 
wealth  of  a  Mozart  or  a  Bizet,  the  dramatic  and  emotional  elements  of 
Wagner,  scarcely  find  adequate  representation  in  the  ideas  dominating 
peculiarly  modern  production. 

The  basic  idea  of  modern  music  is  perhaps  best  expressed  in  the  works 
of  Richard  Strauss,  and  in  studying  these  it  is  interesting  to  note  how 
closely  allied  with  verbal  conceptions,  as  distinguished  from  purely 
musical  expression,  are  the  productions  of  this  interesting  author.  In 
other  words,  how  he,  and  distinctively  modern  music  with  him,  seem  to 
present  the  inevitable  return  to  the  ideal  starting-point,  with  all  the 
resources  of  modern  orchestration.  This  tendency  to  develop  the  purely 
cerebal  element  of  musical  expression  has  been  noted  by  modern  criticism. 
Says  Mr.  James  Huneker^  in  his  Essay  on  Strauss:  "He  is  a  thinker, 
a  philosopher  as  well  as  a  poet,  and  deeply  religious  in  the  cosmical 
sense;  he  purposes  no  less  a  task  than  the  complete  subjugation  of  men's 
imagination.    Notes,  phrases,  groups,  movements,  masses  of  tone  are 

^Ovtrtones,  p.  49. 


Bk.  II  The  Law  of  Intellectual  Progress  341 

no  longer  merely  sensuous  symbols,  but  the  actual  symbols  of  a  language; 
we  must  hasten  to  learn  the  new  speech."  Again, ^  "Music  .  .  . 
has  never  been  so  articulate,  so  dangerously  definite,  so  insidiously 
cerebral."  Says  another  student^  of  modern  music:  "Strauss  is  what 
the  French  called  un  cerebral,  which  is  by  no  means  the  same  thing  as  a 
man  of  intellect.  Un  cerebral  is  a  man  who  feels  through  his  brain,  in 
whom  emotion  transforms  itself  into  idea  rather  than  in  whom  idea 
is  transfigured  by  emotion."  This  tendency  seems  a  definite  and 
self-conscious  one;  Strauss^  says  with  reference  to  the  score  of  "Also 
sprach  Zarathustra" :  "I  meant  to  convey  musically  an  idea  of 
the  development  of  the  human  race  from  its  origin,  through  the 
various  phases  of  development,  religious  as  well  as  scientific,  up  to 
Nietzsche's  idea  of  the  Uebermensch."  Again :4  "Why  cannot  music 
express  philosophy?  Metaphysics  and  music  are  sisters.  Even  in 
music  one  can  express  a  viewpoint,  and  if  one  wishes  to  approach 
the  World  Riddle,  perhaps  it  can  be  done  with  the  aid  of  music." 
One  seems  to  hear  an  echo  of  the  far-off  music  of  ancient  India  or 
Egypt. 

Article  6  —  Poetry. 

In  the  history  of  the  arts  considered,  ideas  are  met  incapable  of  ade- 
quate expression  in  words  —  hence  the  arts  in  which  these  ideas  seek 
their  proper  realization.  The  decorative  ideas  of  the  period  of  Francis  I 
cannot  be  expressed  without  actually  designing  in  that  combination  of 
classic  and  Gothic  form  typical  of  the  early  French  Renaissance.  It  is 
impossible  to  express  the  conceptions  of  a  Veronese  without  attempting 
to  reproduce  the  typical  wealth  of  colour  and  form  his  name  recalls. 
And  so  through  the  other  arts:  forms  in  stone  or  musical  chords  are 
necessary  to  their  expression.  In  turning  to  the  literary  art,  however, 
ideas  appear,  finding  their  proper  expression  through  the  media  of 
words. 

When  the  results  of  the  activities  of  the  human  mind  in  this  field  are 
considered,  its  creative  fertility  is  more  limited  than  might  be  supposed. 
"The  lesson  of  the  new  science  of  Comparative  Mythology,"  says  Sir 
Henry  Maine,  "is  the  barrenness  in  primitive  times  of  the  faculty  which 
we  most  associate  with  mental  fertility,  the  Imagination."    The  lesson 

'  Ibid.,  p.  17- 

'  Arthur  Symons,  cited  by  Huneker,  Ibid.,  p.  35. 

•  Ibid.,  p.  4S. 

«  Ibid.,  p.  35- 


342  Intellectual  Progress  Pt.  IV 

in  other  fields  may  seem  not  distantly  removed  from  that  of  compara- 
tive mythology. 

As  Sir  Henry  Maine  says,  progress  consists  in  the  continued  production 
of  new  ideas.  In  order  then  to  trace  the  progress  of  hterary  expres- 
sion it  is  necessary  to  turn  the  attention  to  the  ideas  dominating  each 
progressive  age,  and  to  formulate  these  in  their  simplest  terms.  The 
subject  may,  of  course,  be  developed  indefinitely.  The  present  purpose 
involves  but  the  briefest  of  glances  across  the  ages,  tracing  the  move- 
ments of  the  dominant  luminaries,  in  order  to  discover,  if  possible, 
the  law  of  their  motion.  In  such  a  glance,  it  may  be  observed  that 
the  moons  and  satellites  but  follow  the  greater  bodies.  They  can 
no  more  escape  their  influence  than  matter  cease  to  gravitate. 

It  seems  reasonable  to  trace  man's  first  attempts  at  articulate 
expression  to  the  desire  for  simple  communication;  to  the  idea  under- 
lying the  transmission  of  direct  and  unimaginative  truths.  Records 
remain  of  but  a  very  late  period  of  man's  linguistic  history;  a  large 
portion  of  the  earliest  of  these  supports  such  a  position  and  possesses 
no  literary  or  artistic  interest.  Many  of  the  Cuneiform  and  Egyptian 
inscriptions  are  historical,  legal  or  astronomical  documents.  Doubtless 
however,  long  before  these  the  records  of  kings  and  heroes  began  to 
possess  a  mythological  and  legendary  significance,  and  literature,  or 
poetry,  properly  speaking,  came  into  being. 

The  earliest  form  of  poetry  is  nearly  always  the  heroic  epic.  An 
analysis  of  the  Ramayana  and  the  Mahabharata  of  India,  the  earlier 
legends  of  Persia,  of  the  myths  of  the  Eddas  and  the  Niebehmg  and  even 
of  many  aspects  of  mediaeval  European  poetry,  reveals  a  certain  phase 
of  song  as  typical  of  the  thought  of  early  civilizations;  and  wherever 
such  poetry  appears,  it  has  found  its  richest  and  fullest  expression  in  the 
Iliad  and  the  Odyssey.  The  idea  round  which  poetry  of  this  nature 
revolves,  is  the  idea  of  martial  prowess;  and  reaches  its  apotheosis  in 
in  Homer.  The  great  ^schylus,  the  father  of  Greek  tragedy  is  cited  ^ 
as  regarding  his  own  works  as  but  crumbs  fallen  from  Homer's  mighty 
banquet. 

In  Homer,  then,  the  idea  round  which  revolve  man's  first  literary 
aspirations  —  the  idea  of  the  fierce  joys  of  a  world  in  which  "strife  was 
father  and  king,"  —  has  found  its  fullest  expression,  sung  as  no  man  has 
sung  since  the  day  of  the  first  great  epic. 

It  cannot  be  assumed  that  the  Iliad  and  the  Odyssey  epitomize  all 

^Athenxus.  VIII.,  3g. 


Bk.  II  The  Law  of  Intellectual  Progress  343 

Eastern  and  Western  thought  of  the  earliest  period;  there  are  notable 
exceptions;  in  the  Vedantic  and  Egyptian  writings;  the  compilations 
of  Confucius;  in  the  Zenda  Vesta,  and  in  that  rich  and  varied  body  of 
Greek  material  from  Orpheus  and  Hesiod  to  Theocritus  and  the  Alexan- 
drians. This  material,  however,  in  its  most  important  manifestations, 
is  either  philosophic  or  theological  and  will  be  examined  in  its  place. 
Poetry  alone  is  here  considered  and,  as  pure  rhythmic  song,  Homer 
may  well  be  regarded  as  having  exhausted  this  first  of  poetic  ideas. 

Three  stately  figures  dominate  the  Latin  world  of  letters:  Lucretius, 
Cicero,  and  Virgil.  The  great  poet  of  the  Republic  is,  however,  first  and 
last  a  philosopher  and  but  voices  Greek  discoveries;  he  cannot,  therefore, 
be  regarded  as  the  typical  Roman  poet.  Cicero  again  is  largely  a  philos- 
opher and  a  Hellene  to  the  extent  in  which  he  philosophizes.  Virgil, 
primarily  a  poet  and  a  Roman,  presents  the  next  great  figure,  the  next 
idea,  in  the  progressive  sequence  of  literary  thought. 

Virgil  was  born  in  the  year  70  B.  C.  The  battle  of  Actium  was  fought 
in  31  B.  C.  Virgil  was  consequently  in  his  prime  at  that  memorable 
period  of  the  ancient  world.  He  was  a  friend  of  Maecenas;  and  Maecenas 
was  the  minister  and  friend  of  Augustus.  Given  these  facts,  and  a  slight 
familiarity  with  the  political  conditions  of  the  Roman  world  of  the  period, 
the  idea  round  which  the  more  serious  work  of  Virgil  would  revolve,  might 
be  predicted.  The  /Eneid,  while  cast  in  the  Homeric  matrix  of  the 
heroic  epic,  and,  at  the  same  time,  saturated  with  earlier  Graeco-Roman 
thought,  is  neither  an  heroic  epic  nor  a  Lucretian  dissertation  on  the 
nature  of  things.  Virgil,  in  fact,  presents  a  new  idea  in  its  highest  form. 
The  idea,  first  of  all,  of  imperial  and  political  unity,  of  the  majesty  of 
Roman  power;  and,  combined  with  this,  a  deeper  and  more  significant 
conception  of  nature  and  man  than  may  be  found  in  the  struggles  of 
Hector  and  Achilles.  The  poet  of  the  Augustan  age  infused  these  ideas 
into  literary  expression,  and  his  mind  long  dominated  the  poetic 
thought  of  the  Middle  Ages  in  their  mystico-theological  speculations. 

The  shade  of  Dante  next  appears  upon  the  literary  horizon.  With 
study  of  the  works  of  these  three  singers  —  Homer,  Virgil,  and  Dante  — 
questions  arise  with  reference  to  the  action  of  the  poetic  intellect.  What 
is  poetry?  What  are  its  proper  functions?  Does  it  present  a  picture 
of  nature  to  be  taken  seriously,  in  its  rational  and  philosophic  aspect,  or 
but  a  vague  and  distorted  impression,  whose  chief  significance  lies  in 
the  magic  of  the  rhythm  or  the  beauty  of  the  imagery?  Upon  the  answer 
to  these  questions  will  depend  the  impression  derived  from  the  great 


344  Intellectual  Progress  Pt.  IV 

poetic  creations  of  the  past.  Christianity  has  come  into  existence 
since  the  days  of  VirgU,  and  the  Divina  Commedia  is  a  view  of  nature 
seen  through  the  camera  obscura  of  mediaeval  Roman  Catholicism, 
coloured  by  mythical  traditions  of  the  ancient  world  and  Floren- 
tine politics.  The  poet  presents  conceptions  of  moral  rectitude  and 
retribution  for  sin,  as  formulated  by  the  conventional,  theological, 
and  political  traditions  of  his  age.  He  presents  a  "vision"  —  a 
mysticaly  and  symbolical  vision.  The  poem  of  Dante  is  a  work  of 
extraordinary  imaginative  power,  with  isolated  passages  of  rare  force 
and  beauty.  If  an  attempt  is  made  to  sink  beneath  the  surface 
however,  in  search,  not  of  imaginative  creations,  but  of  some  definite, 
rationally  acceptable  truth,  the  result  seems  to  be  but  symbolized 
visions  and  mysticism  —  Christo-pagan  visions  and  mysticism  —  re- 
volving round  the  idea  of  reward  and  punishment  in  another  world. 
This  idea  has  given  rise  to  a  vast  field  of  literary  production,  evolved 
from  mediaeval  religious  and  political  conceptions,  and  based  upon  theo- 
logical and  mystical  interpretations  and  demonstrations. 

If  works  of  this  nature  are  regarded  as  poetic  imagery,  they  possess 
all  the  value  of  such  imagery.  If  supposed  to  contain  a  deeper  cosmo- 
logical  significance,  their  value  will  depend  upon  the  value  attached  to 
interpretations  of  nature  derived  through  what  might  be  called  the 
mathematico-mystical  method  from  theologico-mythical  information. 

A  characteristic  application  of  this  method,  of  which  endless  examples 
occur  in  Pythagorean  and  theological  literature,  is  found  in  the  Vita 
Nuova^.  Dante  there  says  that  the  death  of  Beatrice  occurred  on  the 
ninth  day  of  the  month,  and,  in  the  Syrian  reckoning,  in  the  ninth  month 
of  the  year.  According  to  Ptolemy,  and  other  no  less  trustworthy 
sources  of  information,  there  are  nine  heavens,  which  work  effects  on 
earth  in  accordance  with  their  conjunctions.  From  this  data  he  infers 
that  his  lady  was  a  nine,  "by  similitude."  But  it  is  evident  that  the 
number  three  is  the  root  of  nine,  and  at  the  same  time,  that  the  Author 
of  miracles  is  three;  from  which  it  may  be  perceived  that  the  lady  in 
question  was  a  miracle  whose  only  root  was  the  Holy  Trinity.  He 
adds  that  a  more  subtle  inquirer  might  find  more  subtle  solutions,  but 
that  this  simple  explanation  to  him  is  the  most  satisfactory. 

The  world  moves  on;  literary  production  continues.  Poetico- 
theological  symbolism  and  mysticism  are  unable  to  dominate  a  succeed- 
ing age,  and  the  reaction  sets  in.    The  next  important  idea  underlying 

•XXX. 


Bk.  II  The  Law  of  Intellectual  Progress  345 

literary  expression  is  that  of  the  skeptical  man  of  the  world:  the  idea 
dominating  the  minds  of  such  men  as  Montaigne,  Cervantes,  and  Ra- 
belais. Popular  ignorance  and  theological  dogmatizing  produce  the 
usual  results  in  the  clearer  intellects,  and  these  hold  up  a  mirror  to 
the  world  in  which  they  live;  a  polished  surface  as  it  were,  reflecting 
their  world  and  nothing  else;  except,  perhaps,  the  more  or  less  cynical 
smile  with  which  they  flash  reflections  of  what  they  see  therein. 

The  great  Shakespeare  perhaps  typifies  this  idea  in  its  highest  expres- 
sion; the  idea  of  what  might  be  called  the  "laugh,"  and  at  times  a  sad 
and  vacant  laugh;  the  idea  with  which  many  of  the  clearest  and  ablest 
intellects  the  world  has  produced  have  found  themselves  constrained  to 
look  upon  the  changes  rung  upon  the  tawdry  stage  of  human  existence. 
This  idea  is  found  in  many  tongues  and  ages;  and  often  seeks  expres- 
sion when  older  forms  of  thought  are  breaking  up:  Lucian,  Cervan- 
tes, Heine,  Swift,  Voltaire. 

The  constant  flux  observable  in  intellectual  history,  shows  the  inter- 
action of  two  forces  upon  each  other  —  the  action  of  society  upon  the 
creative  intellect  and  that  of  the  intellect  upon  society.  The  early  tribal 
wars  and  wanderings  produce  the  heroic  epic  culminating  in  the  never 
equalled  Homer;  the  wider  political  horizon  of  Rome  and  a  later  world, 
combined  with  Hellenic  thought  and  theological  speculation,  produce 
Virgil;  Virgil  and  theological  mysticism  evolve  Dante;  mysticism  reacts 
as  skepticism;  and  skepticism  as  what  might  be  called  theological  ratio- 
cination. Mysticism  is  incapable  of  containing  the  clearer  intellects, 
and  skepticism  is  the  result;  skepticism,  however,  leads  to  nothing,  and 
in  its  turn  is  inadequate  to  hold  the  deeper  and  more  searching  thought; 
the  poet  turns  once  more  to  ponder  and  to  "make." 

Milton  typifies  the  next  idea  in  the  development  of  the  poetic  intel- 
ligence. Paradise  Lost  is  one  vast  argument.  It  is  a  reaction  against 
skepticism;  a  conscious  attempt  to  present  the  rational  justification 
underlying  the  then  existing,  and  still  persisting,  theological  intrepreta- 
tions  of  nature  in  the  Western  world.  The  foundation  upon  which  this 
entire  argument  depends,  is  the  idea  of  the  "fall"  of  man.  This  idea  of 
the  "fall"  is  an  interesting  one  in  intellectual  history,  showing  the  per- 
sistence of  tradition  on  one  hand;  and,  in  the  words  of  Sir  Henry  Maine, 
"  the  barrenness  in  primitive  times  of  the  faculty  which  we  most  asso- 
ciate with  mental  fertility,  the  Imagination."  The  minds  of  men  of  a 
certain  type,  gravitate  toward  this  idea,  with  mechancial  precision; 
it  may  be  found  in  nearly  all  theological  systems,  and  doubtless  first 


34^  Intellectual  Progress  Pt.  IV 

presented  itself  as  the  only  method  of  accounting  for  the  existence  of 
evil  in  the  construction  of  theological  formula.  It  is  endlessly  reiterated 
in  theological  speculation,  in  East  and  West  alike.  Hesiod^  and  Ovid^ 
present  familiar  Western  forms,  while  Christo-theological  systems 
doubtless  incorporated  it  within  their  doctrines,  as  derived  from  the 
Chaldean^  influences  from  which  so  much  of  Hebrew  tradition  seems 
evolved. 

This  idea  of  the  "fall,"  lying  at  the  base  of  a  great  volume  of  theo- 
logical and  poetical  production  —  ancient  and  modern,  Eastern  and 
Western  —  is  of  interest  with  reference  to  Christianity,  so  far  as  the 
words  of  Christ  may  be  regarded  as  the  foundation  of  Christian  systems. 
There  is  apparently  no  suggestion  in  His  words  in  any  way  involved  with 
this  position.  The  volume  of  literary  production  revolving  round  the 
idea  of  the  "fall  of  man,"  and  dating  from  the  oldest  Chinese  and 
Chaldean  records,  down  to  the  most  recent  theological  demonstrations 
of  Europe,  is  too  vast  to  permit  even  suggestion.  The  significance  of 
this  field,  however,  seems  to  depend  upon  the  acceptance,  as  a  basis  of 
reasoning,  of  traditional,  cosmological  conceptions  of  periods  which  have 
left  no  record;  tradition  which  all  scientific  evidence  shows  to  be  question- 
able, to  say  the  least.  As  the  sage  Aristotle^  remarks,  quoting  an  old 
Hellenic  proverb  with  reference  to  the  poetic  conceptions  of  the  Cosmos, 
ToXkoi  (jjeuSovxac  dotSof,  "the  bards  sing  many  fallacies." 

To  regard  the  works  of  Virgil,  Dante,  and  Milton  in  the  light  of  purely 
rationalized  analysis  may  seem  lacking  in  proper  appreciation.  This 
attitude  may,  however,  be  questioned,  for  the  reason  that  the  works  of 
these  men  must  apparently  be  regarded,  either  as  purely  artistic  creations 
of  the  imagination,  possessing  only  an  imaginary  significance;  or,  as 
containing  a  deeper  and  profounder  meaning  underlying  their  poetic 
exterior.  If  the  latter  point  of  view  is  adopted,  this  deeper  meaning, 
when  simply  and  clearly  expressed,  should  be  capable  of  withstanding 
the  most  thorough  scrutiny  to  which  it  may  be  subjected.  From  the 
other  point  of  view,  these  works  may  apparently  be  considered  as  sug- 
gestive efflorescences  of  the  poetic  faculty;  of  interest  in  detail,  but  when 
regarded  as  consistent  wholes,  as  having  only  imaginary  connexion 
with  nature  or  reality,  and  slight  application  to  the  problems  besetting 
the  human  mind.     Whichever  point  of  view  is  adopted,  some  ground 

'  Work  and  Days,  109  et  seq. 

•  Metamorphoses,  I,  3. 

•  The  Chaldean  Account  of  Genesis.  George  Smith,  pp.  X3,  VJ, 
^  Metaph.  A.  2.   98.^  a  .^. 


Bk.  II  The  Law  of  Intellectual  Progress  347 

of  sympathy  with  Plato  ^  may  be  discovered  in  the  treatment  accorded 
the  poets  in  his  ideal  State:  That  they  should  be  regarded  as  persons  of 
great  note,  worthy  of  all  respect  and  consideration;  that  they  should  be 
anointed  with  oil  and  crowned  with  garlands  and  —  sent  upon  their 
way  rejoicing.     IToXXa  ^ysuBovTat  aotSol. 

Another  age  followed;  argumentative  theologizing  is  incapable  of 
containing  the  more  powerful  intellects,  and  another  voice  arose. 
Every  lover  of  the  inexhaustible  Faust  knows  it  to  be  the  con- 
sistent elaboration  of  the  ethical  principle  underlying  the  bulk  of  ethical 
systems.  This  elaboration,  however,  is  not  one  of  mystico-mythical 
speculation  nor  rationalistic  development  of  undemonstrated  theological 
hypothesis;  but  one  of  the  most  beautiful  and  richest  of  poetical  inter- 
pretations of  nature.  It  is  however,  a  poetical  interpretation  and  a 
metaphysical  elaboration,  and  poetry  and  metaphysics  have  in  their 
turn  been  superseded.  The  Sturm  and  Drang  of  the  earlier  decades 
of  the  last  century,  so  perfectly  voiced  in  Faust,  have  given  way  to 
what  seems  the  characteristic  attitude  of  the  modern  mind;  an  attitude 
which  may  be  summarized  in  one  brief  word  —  truth. 

The  modern  literary  producer  no  longer  seeks  subjective  and  meta- 
physical interpretation  of  the  world,  in  the  workings  of  his  own  imagina- 
tion, with  a  Werther  or  a  Faust;  but,  on  the  contrary,  tries  to  look 
upon  external  objective  nature  as  it  is.  The  masters  of  nineteenth  and 
twentieth  century  poetry  and  prose  no  longer  present  vast  mystical  and 
theological  conceptions;  their  single  object,  the  one  idea  with  which  they 
seem  to  labour,  is  the  transcription  of  nature,  if  the  term  is  permissible, 
rather  than  either  its  interpretation  or  translation,  and  "the  humble 
truth,"  as  Guy  de  Maupassant  would  say,  their  chief  or  only  inspiration. 
Upon  no  page,  perhaps,  has  life  been  so  intimately  and  literally  tran- 
scribed as  upon  that  of  Tolstoi.  Tolstoi  presents  the  essential  concep- 
tion underlying  modern  literature;  truth  —  truth  direct  and  unadorned. 

It  is  of  interest,  too,  to  study  the  works  of  Tolstoi  with  some  such 
thought  in  mind;  for  two  periods  maybe  discovered  in  his  productive 
activity;  his  earlier,  or  artistic  period,  giving  place  to  a  later,  directly 
didactic  period.  Tolstoi  thus  exemplifies  in  his  own  person  the  characteris- 
tic attitude  of  modern  artistic  and  literary  expression  in  its  extreme  form; 
abandoning,  as  he  did,  even  the  literally  transcriptive  method  of  ob- 
serving nature  for  the  direct  and  simple  statement  of  perceived  or 
reasoned  facts.     Literary  expression  is  almost  reduced  to  pure  science 

« Republic,  III.,  398  A. 


348  Intellectual  Progress  Pt.  IV 

at  such  a  period;  and  science,  in  its  broader  sense,  may  well  be  considered 
as  epitomizing  latter-day  art.  The  salient  characteristic  of  modern 
expression,  in  all  its  fields,  seems  to  be  the  direct  formulation  of  unimag- 
inative truths.  This  characteristic  renders  the  present  the  natural,  or 
scientific,  period  of  production  as  distinguished  from  others.  Here, 
then,  in  the  field  of  modern  literature,  is  the  tendency  to  look  to  truth 
and  truth  alone;  a  tendency  which  seeks  no  higher  motive,  recognizes  no 
nobler  inspiration,  than  may  be  found  in  natural  fact  and  natural  law. 
Thus,  if  it  may  be  assumed  that  the  dominant  idea  underlying  man's 
earliest  incentive  to  linguistic  communication  was  the  desire  to  express 
the  simple  natural  facts  of  existence,  a  by  no  means  strained  analogy  may 
be  traced  between  the  ideas  underlying  his  first  and  latest  periods  of 
expression. 

The  entire  field  might  be  crudely  epitomized  as  follows:  Organic 
evolution  develops  unimaginative  speech,  or  the  direct  statement  of 
perceived  truths.  Speech  develops  organized  society  and  war.  War 
produces  the  heroic  epic  and  Homer.  Homer  and  later  political  so- 
ciety produce  Virgil.  Virgil  and  mediaeval  Christianity  produce  Dante, 
or  theological  mysticism.  Mysticism  gives  way  to  skepticism  and 
Shakespeare.  Skepticism  reacts  in  the  form  of  tradition-based,  argu- 
mentative theologizing,  and  Milton.  Argumentative  theologizing  is 
followed  by  independent  metaphysical  interpretation  of  nature,  and 
metaphysical  interpretation,  by  the  independent  statement  of  directly 
perceived  truths,  and  —  the  cycle  is  complete. 


CHAPTER  III 

SCIENCE  AND  MAN 

MONG  the  most  important  results  of  scientific  research  has 
been  an  increasingly  accurate  conception  of  the  place  occupied 
by  the  human  race  in  the  material  universe.  Few  more 
important  contributions  to  knowledge  may  be  made  than 
those  coming  under  the  head  of  the  astronomical  and  evolutionary 
sciences.  These  sciences  have  shown,  with  apparently  unquestionable 
evidence,  the  story  of  man's  past,  and  to  these  must  he  look  for  the 
story  of  his  future:  the  goal  to  which  his  progress  leads. 

"What  will  be  the  end  thereof?  "  asks  Doctor  Maudsley.^  "Are  we  to 
look  forward  to  a  continued  becoming  or  to  an  ultimate  unbecoming  of 
things?  Will  evolution  on  earth  go  on  forever?  Or  is  not  the  end  of  Hfe 
on  earth  foredoomed  by  as  certain  a  fate  as  the  end  of  individual  life? 
Will  not  the  same  causes  that  have  formed  it,  and  are  bringing  it  to 
perfection,  even  should  they  continue  to  operate,  inevitably  bring  it 
to  destruction?  .  .  .  The  common  law  of  life,"  he  continues,^ 
answering  his  own  question,  is  slow  acquisition,  equilibrium  for  a  time, 
then  a  gentle  decline  that  soon  becomes  a  rapid  decay,  and  finally 
death.  It  is  a  law  which  governs  the  growth,  decline,  and  fall  of  nations 
as  well  as  of  individuals,  for  a  nation,  being  but  a  complex  union  of  very 
complexly  constituted  individuals,  cannot  any  more  than  they  continue 
forever  in  one  stay.  Nor  can  humanity  as  a  whole  escape  the  doom 
thus  plainly  decreed  for  it.  If  the  force  at  the  back  of  all  becoming  on 
earth  is  that  which  the  sun  has  steadily  supplied  to  it  through  countless 
ages,  and  still  steadily  supplies,  it  is  plain  that  when  it  fails,  as  fail  it 
one  day  must,  there  will  be  a  steadily  declining  development  and  a 
rapidly  increasing  degeneration  of  things,  an  undoing  by  regressive  de- 
compositions of  what  has  been  done  by  progressive  combinations  through 
the  succession  of  the  ages." 

The  human  race,  regarded  in  relation  to  the  planetary  life  within  which 
it  is  contained,  or  in  relation  to  a  planet  contained  itself  within  a  sidereal 


>  Body  and  Will,  p.  317. 
»  Ibid.,  pp.  319-320. 


349 


350  Intellectual  Progress  Pt.  IV 

system,  can  look  forward  apparently  to  nothing,  but  a  process  of  evolu- 
tion and  devolution;  leading  not  only  to  the  death  and  dissolution  of  the 
planet  upon  which  its  uneasy  existence  has  been  evolved,  but  to  the 
dissolution  of  the  system  within  which  that  insignificant  planet  itself 
has  been  brought  into  existence. 

A  species  can  have  have  but  a  limited  existence.  Palseontological 
laws  show  that  every  life  province  is  but  a  geological  flora  or  fauna  in 
course  of  becoming  fossilized;  the  rhythmic  motion  of  the  waves  of  time 
will  absorb  man  and  his  progress  with  the  same  certainty  that  they  have 
absorbed  the  extinct  species  of  the  past.  "Yet  one  more  rhythm," 
says  Mr.  Spencer,^  "extremely  slow  in  its  action,  may  be  traced  in  the 
phenomena  of  life,  contemplated,  under  their  more  general  aspect. 
The  researches  of  the  palaeontologists  show  that  there  have  been  going 
on  during  the  vast  period  of  which  our  sedimentary  rocks  bear  record, 
successive  changes  of  organic  forms.  Species  have  appeared,  become 
abundant  and  then  disappeared.  Genera,  at  first  constituted  of  but  few 
species,  have  for  a  time  gone  on  growing  more  multiform,  and  then  have 
begun  to  decline  in  the  number  of  their  subdivisions,  leaving  at  last  but 
one  or  two  representatives,  or  none  at  all.  During  longer  epochs  whole 
orders  have  thus  arisen,  culminated  and  dwindled  away.  And  even  those 
wider  divisions  containing  many  orders  have  similarly  undergone  a  gradual 
rise,  a  high  tide  and  a  long  continued  ebb."  This  is  the  law  of  life 
upon  the  planet  earth.  What  may  be  regarded  as  the  law  of  life  of  the 
planet  itself?    Says  Mr.  Spencer r^ 

"For  the  earth,  as  a  whole,  when  it  has  gone  through  the  entire  series 
of  its  ascending  transformations,  must  remain,  like  all  smaller  aggre- 
gates, exposed  to  the  contingencies  of  its  environment;  and  .... 
be  subject  to  forces  sufficient  to  cause  its  complete  disintegration." 

The  mind,  turn  where  it  will,  finds  but  unceasing  change;  whether  it 
regards  the  immediate  phenomena  of  life  or  the  ultimate  laws  governing 
the  movements  of  the  material  universe,  an  all-pervading  process  of 
evolution  and  devolution,  seems  to  be  the  end  of  its  inquiry.  Says 
Mr.  Spencer  :^  "When  that  integration  everywhere  in  progress  through- 
out our  solar  system  has  reached  its  climax  there  will  remain  to  be  effected 
the  immeasureably  greater  integration  of  our  solar  system  with  other 
such  systems.    There  must  then  reappear  in  molecular  motion  what  is 


>  First  Principles,  §  85,  p.  228. 

»  Ibid.,  §  181,  p.  456. 

*  Ibid.,  §§  182,  183,  p.  464. 


Bk.  II  Science  and  Man  351 

lost  in  the  motion  of  masses,  and  the  inevitable  transformation  of  this 
motion  of  masses  into  molecular  motion  cannot  take  place  without  re- 
ducing the  masses  to  a  nebulous  form. 

"Thus  we  are  led  to  the  conclusion  that  the  entire  process  of  things  as 
displayed  in  the  aggregate  of  the  visible  universe  is  analogous  to  the 
entire  process  of  things  as  displayed  in  the  smallest  aggregates. 

"Motion  as  well  as  matter  being  fixed  in  quantity  it  would  seem  that 
the  change  in  the  distribution  of  matter  which  motion  effects  coming  to 
a  limit  in  whichever  direction  it  is  carried,  the  indestructible  motion 
thereupon  necessitates  a  reverse  distribution.  Apparently  the  universally 
co-existent  forces  of  attraction  and  repulsion,  which,  as  we  have  seen, 
necessitate  rhythm  in  all  minor  changes  throughout  the  universe,  also 
necessitate  rhythm  in  the  totality  of  its  changes,  produce  now  an  im- 
measurable period  during  which  the  attractive  forces  predominating  cause 
universal  concentration  and  then  an  immeasurable  period  during  which 
the  repulsive  forces  predominating  cause  universal  diffusion  —  alter- 
nate eras  of  evolution  and  dissolution." 

These  conclusions  are  based  upon  the  phenomena  presenting  laws 
among  the  closest  approximations  to  certainty  \\'ith  which  the  human 
mind  is  familiar.  They  lead,  apparently,  to  the  opinion  that  human 
progress  however  considered,  can  no  more  present  a  constant  process 
of  ascending  modifications  than  the  progress  of  any  other  species;  or 
of  any  individual  member  of  any  species.  Death  and  dissolution  await 
human  species  as  certainly  as  they  await  the  individual  man. 

Other  considerations  lead  to  the  same  conclusions.  Heat,  if  not  the 
first  essential,  is  one  of  the  essentials  of  earthly  organic  existence.  The 
heat  from  which  life  on  earth  derives  its  being  springs  from  two  sources; 
the  heat  inherent  in  the  earth  itself  and  that  fountain-head  of  earthly 
vital  energy  —  the  sim.  "The  inquiries  of  Mallet  and  others,"  says 
Proctor,^  "show  that  the  present  vulcanian  energies  of  the  earth  are 
due  in  the  main  to  the  gradual  withdrawal  of  the  earth's  nuclear  parts 
from  the  surface  crust,  because  of  the  relatively  more  rapid  loss  of  heat 
by  the  former.  The  surface  crust  is  thus  left  to  contract  under  the 
action  of  gravity,  and  vulcanian  phenomena  —  that  is,  volcanoes  and 
earthquakes  —  represent  the  mechanical  equivalent  of  this  contraction. 
Here  is  a  process  which  cannot  continue  forever,  simply  because  it  is 
in  its  very  nature  exhaustive  of  the  energy  to  which  it  is  due.  It  shows 
us  that  the  earth's  nuclear  regions  are  parting  with  their  heat,  and  as 

'^Our  Place  Among  Infinities,  p.  28. 


352  Intellectual  Progress  Pt.  IV 

they  cannot  part  with  their  heat  without  warming  the  surface-crust, 
which  nevertheless  grows  no  warmer,  we  perceive  that  the  surface- 
heat  is  maintained  from  a  source  which  is  being  gradually  exhausted. 
The  fitness  of  the  earth  to  be  the  abode  of  life  will  not  only  be  affected 
directly  in  this  way,  but  will  be  indirectly  affected  by  the  loss  of  that 
vulcanian  energy  which  appears  to  be  one  of  its  necessary  conditions. 
At  present,  the  surface  of  the  earth  is  like  the  flesh  clothing  the  living  body ; 
it  does  not  wear  out  because  (through  the  life  which  is  within  it)  it 
undergoes  continual  change.  But  even  as  the  body  itself  is  consumed 
by  natural  processes  so  soon  as  life  has  passed  from  it,  so,  when  the 
internal  heat  of  the  earth,  which  is  its  life,  shall  have  passed  away,  her 
surface  will  'grow  old  as  doth  a  garment';  and  with  this  inherent  terrestrial 
vitality  will  pass  away  by  slow  degrees  the  life  which  is  upon  the  earth." 

If  the  discovery  of  radium  is  regarded  as  modifying  this  view,  inquiry 
is  but  turned  toward  other  fields,  such  as  tidal  friction  of  depletion  of  the 
atmosphere.  Speaking  of  Meunier's  theory  of  the  absorption  of  moisture 
and  atmosphere  as  a  planet  ages.  Proctor^  says:  "But  apart  from  all 
such  considerations,  we  know  that  a  process  of  exhaustion  is  taking  place, 
even  in  the  Sun  himself,  whence  all  that  exists  upon  the  Earth  derives 
its  life  and  daily  nourishment.  So  that  indirectly  by  the  dying  out 
of  the  source  of  life,  if  not  directly  by  the  dying  out  of  life,  this  Earth 
must  one  day  become  as  bleak  and  desolate  a  scene  as  we  believe  the 
Moon  to  be  at  this  present  time." 

It  thus  seems,  by  whatever  process  the  earth  is  deprived  of  heat  or 
atmosphere,  that  the  evolution  of  earthly  life  must  ultimately  reach  a 
point  when  it  will  consist  of  adaptations  to  constantly  worsening  con- 
ditions. "It  is  an  error,"  says  Professor  Huxley,^  "to  imagine  that 
evolution  signifies  a  constant  tendency  to  increased  perfection.  That 
process  undoubtedly  involves  a  constant  remodelling  of  the  organism 
in  adaptation  to  new  conditions;  but  it  depends  on  the  nature  of  those 
conditions  whether  the  direction  of  the  modifications  effected  shall  be 
upward  or  downward.  Retrogressive  is  as  practicable  as  progressive 
metamorphosis.  If  what  the  physical  philosophers  tell  us,  that  our 
globe  has  been  in  a  state  of  fusion,  and,  like  the  sun,  is  gradually  cooling 
down,  is  true,  then  the  time  must  come  when  evolution  will  mean  ad- 
aptation to  an  universal  winter,  and  all  forms  of  life  will  die  out,  except 
such  low  and  simple  organisms  as  the  Diatom  of  the  arctic  and  antarctic 

>  Ibid.,  p.  60. 

'  Evolution  and  Ethics,  p.  199. 


Bk.  II  Science  and  Man  353 

ice  and  the  Protococcus  of  the  red  snow.  If  our  globe  is  proceeding  from 
condition  in  which  it  was  too  hot  to  support  any  but  the  lowest  living 
thing  to  a  condition  in  which  it  will  be  too  cold  to  permit  of  the  exist- 
ence of  any  others,  the  course  of  life  upon  its  surface  must  describe  a 
trajectory  like  that  of  a  ball  fired  from  a  mortar;  and  the  sinking  half  of 
that  course  is  as  much  a  part  of  the  general  process  of  evolution  as  the 
rising." 

Doctor  Maudsley^  presents  the  following  picture  of  the  future  of 
humanity:  ''The  disintegrating  process  may  be  expected  to  take  effect 
first  in  the  highest  products  of  evolution  and  to  reach  in  deepening  suc- 
cession the  low,  lower,  and  lowest  organizations  and  organic  compounds. 
The  nations  that  have  risen  high  in  complexity  of  development  will 
degenerate  and  be  broken  up,  to  have  their  places  taken  by  less  com- 
plex associations  of  inferior  individuals;  they  in  turn  will  peld  place  to 
simpler  and  feebler  unions  of  still  more  degraded  beings;  species  after 
species  of  animals  and  plants  will  first  degenerate  and  then  become 
extinct,  as  the  worsening  conditions  of  life  render  it  impossible  for  them 
to  continue  the  struggle  for  existence;  a  few  scattered  families  of  de- 
graded human  beings  living  perhaps  in  snow  huts  near  the  equator,  very 
much  as  Esquimaux  live  now  near  the  pole,  will  represent  the  last  wave 
of  the  receding  tide  of  human  existence  before  its  final  extinction;  until 
at  last  a  frozen  earth  incapable  of  cultivation  is  left  without  energy  to 
produce  a  living  particle  of  any  sort  and  so  death  itself  is  dead." 

After  reviewing  the  material  upon  which  the  opinion  may  be  based, 
Professor  Cliff ord^  says:  "We  may  therefore,  I  think,  conclude  about 
the  end  of  things  that,  so  far  as  the  earth  is  concerned,  an  end  of  life 
upon  it  is  as  probable  as  science  can  make  anything." 

May  we  look  farther  yet  to  stages  still  later  in  the  history  of  the  earth? 
"Truly,"  says  Proctor,^  "it  is  like  looking  beyond  death;  for  now  imag- 
ination presents  our  earth  to  us  as  an  inert  mass,  not  only  lifeless  as  at  the 
beginning,  but  no  longer  possessing  that  potentiality  of  life  which  ex- 
isted in  her  substance  before  life  appeared  upon  her  surface.  We  trace 
her  circling  year  after  year  around  the  sun,  serving  no  useful  purpose 
according  to  our  conceptions.  The  energy  represented  by  her  motions 
of  rotation  and  revolution  seems  to  be  as  completely  wasted  as  are 
those  parts  (the  whole  save  only  one  23o,cx5o,oooth  portion)  of  the  sun's 


1  Body  and  Will,  p.  320. 

'  Lectures  and  Essays,  The  First  and  Last  Catastrophe,  p.  158. 

•  Our  Place  Among  Infinities,  p.  30. 


354  Intellectual  Progress  Pt.  IV 

light  and  heat,  which,  falling  on  no  planet,  seem  to  be  poured  uselessly 
intoidesert  space." 

This  is  the  picture  science  presents  of  the  future  of  the  teeming  earth: 
a  lifeless  mass  of  matter  sweeping  blindly,  and  apparently  without  pur- 
pose, through  the  undisturbed  silences  of  space,  rotation  succeeding 
rotation,  revolution  succeeding  revolution,  bereft,  not  only  of  life 
but  of  the  very  possibility  of  life.  The  mind,  however,  need  not  stop  here 
for  it  perceives  that  the  planet  earth  is  but  one  of  a  system  of  planets 
with  the  sun  at  its  centre;  this  system  but  an  aggregate  of  atoms,  as  it 
were,  in  limitless  ether;  and  that  this  aggregate  is  sweeping  toward  a 
point  in  one  of  the  constellations,  revolving  in  its  turn  through  a  cycle 
so  vast,  an  orbit  so  immense,  that  neither  its  centre  nor  its  period  can 
be  calculated. 

And  here  the  mind  can  go  no  farther.  "How  grotesquely  ludicrous 
then,"  says  Doctor  Maudsley,^ "  the  absurdity  of  man's  vainly  attempted 
conceptions  of  a  great  final  cause  or  purpose  of  things!  In  order  to 
conceive  a  cosmic  final  cause  it  would  be  necessary  for  the  individual  to 
achieve  the  abolition  of  time,  which  is  the  mere  condition  of  human 
thought,  and  to  acquire  the  power  of  thinking  beyond  himself,  which 
would  be  the  abolition  of  himself." 

And  might  not  the  same  terms  be  applied  to  man's  attempt  to  realize 
a  progress  independently  of  the  laws  of  cosmic  evolution?  Would  it 
not  seem  for  him  to  attain  a  never  ending  process  of  development,  that 
it  would  be  necessary  for  him  to  achieve  the  abolition  of  time,  one  of 
the  conditions  of  his  existence?  Would  it  not  seem,  in  the  light  of 
science,  that  progress  is  a  vast  cosmic  process,  as  much  beyond  the  control 
of  political  society  as  the  plane  of  the  ecliptic?  In  any  fundamental 
sense,  as  much  beyond  the  range  of  the  action  of  the  "great  man's"  mind 
as  the  orbits  of  the  spheres? 

In  the  light  of  science,  man  is  scarcely  the  final  goal  of  the  universe 
the  "heaven-descended  heir"  of  all  the  ages.  His  existence  may  be 
regarded  as  a  more  or  less  unfortunate  accident;  his  story,  in  the  words 
Mr.  Balfour,2  "as  a  brief  and  transitory  episode  in  the  life  of  one  of  the 
meanest  of  the  planets.  Of  the  combination  of  causes  which  first 
converted  a  dead  organic  compound  into  the  living  progenitors  of  human- 
ity, science,  indeed,  as  yet  knows  nothing.  It  is  enough  that  from  such 
beginnings  famine,  disease,  and  mutual  slaughter,  fit  nurses  for  the 


•  Body  and  Will,  p.  324. 

'  Foundations  oj  Belief,  p.  30. 


Bk.  II  Science  and  Man  355 

future  lords  of  creation,  have  gradually  evolved  after  infinite  travail, 
a  race  with  conscience  enough  to  feel  that  it  is  vile,  and  intelligence 
enough  to  know  that  it  is  insignificant.  We  survey  the  past,  and  see 
that  its  history  is  of  blood  and  tears,  of  helpless  blundering,  of  wild 
revolt,  of  stupid  acquiescence,  and  empty  aspirations.  We  sound  the 
future,  and  learn  that  after  a  period,  long  compared  with  the  individual 
life,  but  short  indeed  compared  with  the  divisions  of  time  open  to  our 
investigation,  the  energies  of  our  system  will  decay,  the  glory  of  the 
sun  will  be  dimmed,  and  the  earth,  tideless  and  inert,  will  no  longer 
tolerate  the  race  which  has  for  a  moment  disturbed  its  solitude.  Man  will 
go  down  into  the  pit,  and  all  his  thoughts  will  perish.  The  uneasy 
consciousness,  which  in  this  obscure  corner  has  for  a  brief  space  broken 
the  contented  silence  of  the  universe,  will  be  at  rest.  Matter  will  know 
itself  no  longer.  'Imperishable  monuments'  and  'immortal  deeds,* 
death  itself,  and  love  stronger  than  death,  will  be  as  though  they  had 
never  been.  Nor  will  anything  that  is  be  better  or  be  worse  for  all  that 
the  labour,  genius,  devotion,  and  suflfering  of  man  have  striven  through 
countless  generations  to  effect. " 

That  the  vast  womb  of  nature  will  re-absorb  within  itself  the  world 
to  which  it  has  given  birth,  together  with  all  that  world  contains,  is  not  a 
modern  idea.  It  is  a  thought  to  which  any  rational  mind  is  drawn. 
Lucretius,  two  thousand  years  ago,  gave  it  scientifically  adequate  ex- 
pression.    He  concludes:^ 

Haut  igitur  leti  praeclusa  est  ianua  caelo 
nee  soli  terraeque  neque  altis  aequoris  undis 
sed  patet  immani  et  vasto  respectat  hiatu. 

(\nd  so  Death's  jaws  are  never  dosed,  'gainst  sky  and  earth,  and  sea  and  dawn, 
But  open  wide  e'er  stand  opposed,  looii  back  and  vast,  abysmal,  yawn. 


'  De  Rerum  Natura,  V.  373. 


"Book  III 
RELIGION 

CHAPTER   I 

OBJECT  AND  METHOD  OF  INQUIRY 

(HE  axes  running  north  and  south  and  east  and  west  of  the  con- 
tinent of  Asia  intersect  at  a  point  north  of  the  Himalaya 
Mountains  and  eastward  of  the  Hindu  Kush;  a  point  approx- 
imately the  centre  of  a  vast  cup-like  region,  regarded  by  some 
inquirers  as  the  homestead,  or  cradle,  of  the  human  race.  This  region 
lies  immediately  to  the  north  of  the  mighty  Himalayas;  the  Bolor  and 
the  Ala-Tau  mountains  define  it  on  the  west  and  northwest,  the  Altai 
ranges  and  their  offshoots  upon  the  north  and  east,  and  the  Kuen- 
Loun  to  the  south  and  southeast .  Grouped  around  it  are  the  three  typical 
races  of  man.  "No  other  region  on  the  globe,"  says  de  Quatref ages, ^ 
"presents  a  similar  union  of  extreme  human  types  distributed  round  a 
common  centre." 

As  the  topographical  conformation  of  this  region  is  examined,  its 
suitability  as  a  distributive  centre  is  evident.  From  this  high  lying  bowl, 
as  it  might  be  called,  draining  the  surrounding  mountainous  country, 
pour  the  watercourses  of  the  continent;  the  rivers  of  China  leading 
away  to  the  north  and  east,  the  Salwen  and  the  Me-Khong  through  the 
Malay  Peninsula;  the  Brahmaputra  and  the  Indus,  although  both  rising 
on  the  northern  slopes  of  the  Himalayas,  owing  to  the  remarkable  topog- 
raphy of  the  region,  flow  to  the  southeast  and  southwest  into  the  Bay 
of  Bengal  and  the  Arabian  Sea.  The  Ganges  drains  the  southern  slope 
and  waters  northern  India,  while  the  streams  of  the  western  ranges 
stretch  away  through  the  steppes  of  northwestern  Asia  to  the  valleys 
of  the  Oxus  and  Jaxartes. 

"Salute  these  sacred  summits,"  says  Renan,^  "where  the  great  races 
of  the  world  which  carried  within  their  womb  the  future  of  humanity, 

1  The  Human  Species,  p.  176. 

«  De  I'Origine  du  Language,  p.  231. 


Bk.  Ill  Object  and  Method  of  Inquiry  357 

first  looked  upon  the  infinite;  and  inaugurated  those  two  facts  which  have 
changed  the  face  of  the  world:  morality,  and  reason."  The  men  of 
prehistoric  ages  may  perhaps  be  considered  as  roaming  down  the  great 
watercourses  of  Central  Asia;  streaming  away  like  the  water  they 
followed  through  virgin  valley  and  forest  primeval;  some  to  the  plains 
and  steppes  to  the  northward,  others  to  the  east  along  the  coast  to  the 
Aleutian  islands,  or  across  what  is  now  Behring  Strait  and  the  Island  of 
St.  Lawrence,  to  the  continents  of  another  hemisphere;  some  down  the 
Salwen  and  the  Me-Khong  to  the  Malay  Peninsula,  the  Sundas,  Australia, 
and  New  Zealand,  or,  scattered  like  pollen  by  the  winds  of  the  sea,  im- 
pregnating the  islands  of  the  Pacific.  Others  again,  perhaps,  drifting 
down  the  southern  slopes  of  the  Himalayas,  peopled  the  valleys  of  the 
Indus  and  the  Ganges,  or  streamed  away  to  the  ancient  regions  of  the 
Caspian  and  the  Euxine,  while  the  Tigris  and  Euphrates  led  to  the  Med- 
iterranean and  the  land  of  the  Nile. 

Whatever  theory  of  the  peopling  of  the  world  is  adopted,  however, 
in  Asia  must  be  sought  many  of  the  most  interesting  and  inspiring  con- 
ceptions to  which  the  human  mind  has  given  birth :  in  Asia,  the  primeval 
home  of  humanity,  the  parent  of  letters  and  philosophy,  the  birthplace 
of  the  sciences  and  the  mother  of  religions:    Ex  Oriente  lux. 

To  ask  the  origin  of  religion  is  the  same  as  to  ask  the  origin  of  life. 
To  seek  the  origin  of  fundamental  phenomena,  is  but  to  ask  what  sup- 
ports the  turtle  of  the  Indian  cosmogony,  which  supposes  the  earth  to  be 
upheld  by  an  elephant,  the  elephant  by  a  turtle,  and  the  turtle  suspended 
in  space.  It  would  be  as  well  to  suspend  the  earth  in  space  in  the  first 
place.  "Prima  in  orbe  deos  fecit  timor."  "But  fear  it  was  that  first 
made  gods  on  earth,"  says  Petronius,i  and  concludes: 

"And  now  the  criminal's  vow,  the  traitor's  greed 
Contend,  inventing  gods  to  suit  their  need." 

Religious  phenomena,  in  their  political,  fiscal,  and  metaphysical 
aspects  support  the  opinion  of  the  cynical  Roman.  The  interests  of  priest 
and  politician,  combined  with  the  pecuniary  value  of  ignorance  and 
superstition  in  'the  masses,  have  doubtless  played  an  important 
part  in  the  development  of  the  religious  systems  of  the  world. 
These,  in  connexion  with  the  inexplicable  facts  of  existence;  the 
heavens,  the  sun  and  the  stars,  thunder  and  electricity,  together 
with  man's  imaginative    tendencies,  hallucinations,  delirium,  disease, 

>  Frag.,  v.,  p.  256. 


358  Religion  Pt.  IV 

war,  sex,  birth,  and  death,  form  a  large  proportion  of  the  elements  from 
which  many,  if  not  the  majority,  of  theological  conceptions  are  derived. 

Whatever  the  opinion,  or  lack  of  opinion,  adopted  with  reference 
those  phenomena,  broadly  classified  as  religious,  nothing  seems  more 
clearly  demonstrated  in  history,  however,  than  that  religion  is  a  force; 
and  intangible,  inexplicable  force,  perhaps,  but  a  force  none  the  less; 
and  as  such,  no  more  to  be  disregarded  in  the  study  of  political  and 
social  phenomena,  than  any  other  fact  falling  beneath  the  observation. 

"An  unbiased  consideration  of  its  general  aspects,"  says  Mr.  Spencer,^ 
"forces  us  to  conclude  that  religion,  everywhere  present  as  a  weft  run- 
ning through  the  warp  of  human  history,  expresses  some  eternal  fact." 
Such  considerations  suggest  that  the  least  unsatisfactory  method  for 
the  study  of  the  phenomena  of  religion,  is  identically  the  same  as  that 
adopted  in  the  study  of  other  phenomena.  Their  existence  is  accepted 
for  the  reason  that  they  leave  impressions  upon  the  faculties.  These 
are  analyzed  and  classified,  and  these  classifications  form  the  bases  and 
criteria  to  which  subsequent  impressions  and  inductions  may  be  referred. 

The  study  of  the  phenomena  of  religion  is,  however,  fraught  with 
difficulties  of  observation  and  interpretation,  from  which  the  inductive 
natural  sciences  are  largely  free.  Cicero^  tells  the  story  of  Simonides 
and  the  tyrant  Hiero,  in  which  the  latter  requests  the  philosopher  to 
tell  him  something  of  the  nature  of  the  gods.  Simonides  asks  for  a  day 
in  which  to  consider  the  matter;  the  next  day  he  begs  for  two  days  more; 
then  for  four  days  for  further  meditation,  and  subsequently  continued 
doubling  the  time  required.  When  Hiero  asked  the  reason,  he  replied 
that  the  longer  he  considered  the  subject,  the  greater  became  its  difficulty 
and  obscurity. 

This  difficulty  and  obscurity  are  the  prevailing  impressions  in  inquiry 
devoted  to  religion.  There  exists,  however,  a  body  of  trustworthy, 
scientific  material  dealing  with  the  subject  due  to  the  patient  effort  and 
research  of  many  able  scholars.  Their  labours,  divorced  from  theo- 
logical, metaphysical,  and  traditional  influences  present,  perhaps,  the 
most  useful  critical  commentary  with  reference  to  the  field  considered. 
This  apparatus,  in  connexion  with  the  original  sources  of  information 
as  the  basis  of  study,  presents  the  essentials  of  any  rationalized  conclu- 
sions with  reference  to  religion.  In  order  to  reach  such  conclusions, 
however,  it  is  necessary  to  submit  the  subject  under  discussion  to  two 

'  First  Principles,  {  6.,  p.  l6. 
«  De  Nat.  Dear.,  I.,  aa. 


Bk.  Ill  Object  and  Method  of  Inquiry  359 

distinct  processes:  (i)  An  analytical  process  of  separate  phenomena, 
or  an  attempt  to  resolve  these  into  their  constituent  parts;  (2)  a 
comparative  and,  if  possible,  synthetic  process,  by  means  of  which  these 
parts  may  be  studied  in  relation  to  each  other,  or  united  in  a  synthesis 
of  the  essentials  of  the  entire  field.  "Method,"  as  Aristotle^  would 
say,  "begins  when  from  a  variety  of  conceptions  derived  from  experi- 
ence, one  universal  conception  is  evolved  which  embraces  all  similar 
cases." 

While  no  conclusive  evidence  exists  with  reference  to  the  origin  of 
religion,  material  is  found  giving  vague  glimpses  of  the  origin  of  re- 
ligions. Comparative  philology  presents  data  from  which  such 
glimpses  may  be  derived.  Professor  Miiller^  says,  in  recapitulating 
the  conclusions  of  his  third  lecture  on  the  science  of  religion :  * '  We  found, 
first  of  all,  that  there  is  a  natural  connection  between  language  and 
religion,  and  that  therefore  the  classification  of  languages  is  applicable 
to  the  ancient  religions  of  the  world. 

"We  found,  secondly,  that  there  was  a  common  Aryan  religion  before 
the  separation  of  the  Aryan  race;  a  common  Semetic  religion  before  the 
separation  of  the  Semetic  race;  a  common  Turanic  religion  before  the 
separation  of  the  Chinese  and  the  other  tribes  belonging  to  the  Turanian 
class.  We  found,  Ln  fact,  three  ancient  centres  of  religion  as  we  had 
found  before  three  ancient  centres  of  language,  and  we  have  thus  gained, 
I  believe,  a  truly  historical  basis  for  a  scientic  classification  of  the  prin- 
cipal religions  of  the  world." 

No  material  exists,  apparently,  permitting  the  explanation  of  the 
evolution  and  classification  of  religions  much  beyond  the  position  sum- 
marized in  the  foregoing  citation.  A  study  of  the  ultra-primitive  re- 
ligious conceptions  of  man,  based  upon  analysis  and  comparison  of  the 
roots  and  fundamental  characters  of  the  most  ancient  tongues,  seems  to 
present  a  vague  monotheism  as  the  earliest  religous  form  of  which  informa- 
tion may  be  obtained.  Such  information  is,  however,  of  the  most 
elusive  nature.  As  man  spread  himself  over  the  surface  of  the  globe, 
and  language  developed  into  written  characters,  later  religions  slowly 
came  into  existence.  With  the  basis  of  classification  suggested  by 
Professor  Miiller,  these  may  best  be  studied  in  relation  to  the  language 
and  branches  of  the  human  family,  from  which  they  are  derived. 

To  the  north  and  east  of  that  region  beyond  the  Himalayas,  provision- 

•  Metaph.  A.  i.   981  a  5. 

*  Scitnce  of  Religion,  p.  99. 


360  Religion  Pt.  IV 

ally  regarded  as  a  distributive  centre  of  population  and  language,  the 
great  Mongolid  family  stretches  to  the  Pacific,  and,  in  the  opinion 
of  certain  ethnologists,  over  the  entire  aboriginal  Americas,  from  the 
Esquimaux  on  the  north,  to  the  Patagonians  and  Fuegians  at  their 
southern  extremity.  In  Taoism  some  scholars  find  the  primitive  creed 
of  ancient  China  in  its  later  phases;  others  see  in  Confucianism  the  re- 
formation of  the  original  beliefs.  On  the  upper  reaches  of  the  Ganges, 
it  seems,  were  written  the  last  hymns  of  the  Vedas;  and  these,  with  the 
other  sacred  waitings,  form  the  bases  of  the  Indian  system  of  Brahman- 
ism.  About  one  hundred  miles  northwest  of  the  sacred  city  of  Benares, 
in  the  country  of  Oudh,  five  centuries  before  Christ,  was  born  Gautama, 
whose  creed  spread  through  southern  India  and  northeastern  Asia; 
dying  out  later  at  its  source,  while  retaining  its  hold  in  other  lands,  and 
forming  one  of  the  "three  religions"  of  China.  To  the  southwest  of 
Central  Asia  lies  the  region  known  to  the  ancients  as  Bactriana,  through 
which  swept  the  legions  of  Alexander,  and  here,  it  seems,  probably  not 
later  than  the  sixth  century  before  the  present  era,  lived  the  great 
Zoroaster;  the  prophet  of  Ormazd  and  Ahriman.  Zoroaster  dominated 
the  religious  thought  and  lives  of  countless  millions  through  the  various 
phases  of  Persian  civilization;  and  is  heard  to-day  by  but  a  few  scattered 
remnants  in  the  land  of  his  birth,  and  the  Parsis  in  western  India.  In 
the  ancient  land  of  Egypt,  a  mysterious  polytheism  and  nature  worship 
seems  to  have  been  the  popular  faith  of  the  teeming  millions  of  the  Nile, 
whose  mysteries  and  priest-craft  are  now  as  silent  and  empty  as  the 
mighty  ruins  of  Karnac.  Here,  too,  was  bom  Moses,  the  law-giver 
of  Israel,  the  prophet  of  the  One  God,  the  Jehovah  of  Abraham  and  the 
Arab  sheiks  of  Ur.  From  Egypt,  again,  and  the  legends  of  the  ancient 
Pelasgi,  sprang  the  beautiful  Hellenic  mythology;  the  gods  of  Orpheus, 
Homer,  and  Hesiod,  and  these,  together  with  numberless  other  streams 
of  influence  from  her  conquests  and  possession,  poured  into  the  lap  of 
the  mistress  of  the  ancient  world  on  the  banks  of  the  Tiber.  A  few 
miles  south  of  Jerusalem,  between  the  Dead  and  the  Mediterranean  Seas, 
lies  Bethlehem;  and  here  was  born  the  Christ  who  preached  the  One  God 
of  Abraham;  not,  however,  as  his  prophet,  but  as  his  only  begotten  Son. 
This  creed  spread  away  to  the  north  and  west,  formed  a  great  focus  at 
Rome  during  the  Middle  Ages,  broke  later  into  various  crystallizations, 
and  spread  its  influence  to  the  New  World.  At  the  northern  extremity 
of  the  region  the  ancients  called  Arabia  Felix,  near  the  shores  of  the 
Red  Sea,  lies  Mecca;  and  here  arose  Mohammed,  the  prophet  of  Islam, 


Bk.  Ill  Object  and  Method  of  Inquiry  361 

whose  followers  swept  across  northern  Africa,  occupied  Spain,  penetrated 
to  the  gates  of  Rome,  and  as  far  north  as  central  France.  To  the  east- 
ward, they  absorbed  the  ancient  Empire  of  the  Persians,  and  with 
Mahmud,  Jenghiz  Khan,  and  Tamerlain  overran  Central  Asia,  China, 
and  India,  and  carved  an  Empire,  reaching  from  the  pillars  of  Hercules 
to  the  Hindo  Kush.  His  followers  form  to-day  numerically,  perhaps, 
the  fifth  of  the  great  religious  creeds  of  the  world;  Christianity  and 
Confucianism  lead  in  the  number  of  their  adherents;  Brahmanism,  or 
Hinduism,  practically  one,  coming  third;  Buddhism  fourth,  while  Taoism 
ranks,  probably,  after  Buddhism  and  Mohammedanism.  Jainism  and 
Zoroastrianism  are  relatively  insignificant  numerically.^ 

These  form  the  chief  religious  classifications  into  which  civilized  man, 
ancient  and  modern,  may  be  divided.  They  form,  as  it  were,  the  natural 
subdivisions  into  which  the  original  classifications  suggested  by  Pro- 
fessor Muller  are  resolved. 

If  a  Japanese  or  Indian  scholar  were  to  visit  England  or  America,  in 
order  to  study  the  religious  systems  of  the  people,  he  would  find  most 
of  the  populations  of  these  countries  styling  themselves  "Christian." 
His  next  question  would  naturally  be:  What  is  Christianity?  The 
Oriental  inquirer  might  well  be  bewildered  with  the  variety  of  replies 
received.  In  these  countries,  regarded  as  largely  under  the  influence 
of  a  single  creed,  he  would  find  endless  opinions  with  reference  to  that 
creed;  opinions  varying  from  the  most  elaborate  teleological  conceptions, 
to  the  attitude  which  regarded  Christianity  as  a  series  of  laboured  hal- 
lucinations, built  around  a  personality  which  may  never  have  existed. 
After  examining  the  opinions  of  orthodox  theologians;  the  endless 
series  of  refutations  by  heterodox  theologians;  the  refutations  of  the  en- 
tire theological  system  —  orthodox  and  heterodox  —  from  other  sources, 
together  with  the  confused  and  inarticulate  opinions  of  the  masses, 
the  Oriental  inquirer  might  begin  to  think  of  Christianity  as  a  strange 
and  elusive  phenomenon;  about  which,  apparently,  none  knew  less  than 
the  Christians.  At  the  same  time,  however,  as  a  student  of  religious 
influences,  he  would  be  unable  to  ignore  Christianity,  for  despite  these 
confused  warrings  and  contradictions,  its  creed  has  occupied  an  im- 
portant place  in  human  history,  and  among  other  great  systems  of 
religious  thought. 

The  important  question  arises,  therefore,  by  what  means  may  the 

'  Cf.  Sir  Monier  Monier-Williams,  Buddhism,  p.  xviii.  These  relations  may  be  largely  modified  in 
accordance  with  the  method  of  classification  adopted.  Cf.  Buddhism  and  Its  Christian  Critics,  by  Dr. 
Paul  Carus,  Chicago,  1897,  p.  165. 


362  Religion  Pt.  IV 

unprejudiced  investigator  discover  the  essential  features  of  Christianity 
and,  at  the  same  time,  free  inquiry  from  the  series  of  mythical,  mystical, 
symbolic,  and  metaphysical  mazes  possessing  interest  chiefly  for  the 
antiquary  or  the  psychologist?  Such  an  inquirer  might  conclude  that 
this  could  best  be  done  by  the  simple  expedient  of  addressing  himself 
immediately  to  the  original  fountain-head  of  Christianity  itself.  In  the 
words  of  Christ,  and  in  the  words  of  Christ  alone,  he  might  expect  to 
find  the  most  direct  and  authoritative  material  dealing  with  the  subject. 

There  is]one  objection  to  the  method.  The  words  of  Christ  present  a 
system  but  remotely  allied  to  existing  systems.  In  other  words,  the 
thought  of  Christ,  freed  from  mysticism,  metaphysics,  and  theological 
interpretations,  contain  little  or  no  statement  of  much  of  the  religious 
opinion  actually  dominant  under  the  name  of  Christianity.  The  method 
adopted  will  thus  depend  upon  the  object  of  inquiry. 

Religious  phenomena  may  be  divided  into  two  distinct  classes:  (i) 
The  permanent  and  original  fountain-head,  or  ultimate  source  of  inspira- 
tion, :from  which  the  religion  in  all  its  phases  is  derived;  (2)  The 
changing  and  shifting  mazes  of  theological  commentary  and  inter- 
pretation; of  myth,  dogma,  teleological  and  metaphysical  speculation, 
crystallizing  about  the  central  figures. 

This  second  class  of  phenomena,  again,  seems  to  resolve  itself  into 
two  classes:  (i)  Certain  fixed  ideas  which,  in  varying  degrees  of 
importance,  are  common  to  almost  all  religions;  such  as  virgin  births, 
powers  of  evil,  the  fall  of  man,  atonements,  miracles,  and  so  forth;  (2) 
A  process  of  thought  sweeping  around  these  fi^xed  ideas  in  endless  cycles 
of  repetition,  contradiction,  and  reiteration  of  form,  dogma  and  rituals 
presenting  an  accumulation  of  mystical  and  symbolic  material,  under- 
going a  process  of  evolution  and  modification,  and  varying  with  varjdng 
conditions;  temporal,  political,  local,  and  intellectual. 

It  is  here  unessential  to  trace  any  comparison  of  these  fixed  ideas,  or  to 
study  their  development.  They  do  not  suggest  any  exalted  opinion  of 
the  resources  of  the  human  imagination.  The  endless  repetitions  of 
the  same  miracles  and  miraculous  conceptions,  the  same  powers  of  evil, 
atonements,  temptations,  annunciations,  transmigrations,  transfigura- 
tions and  trans-substantiations;  the  same  ascensions,  resurrections, 
predestinations,  damnations,  Paradises  and  Purgatories;  the  same  golden 
ages,  falls  of  man,  original  sins,  mystical  trinities  and  unities,  symbolical 
numbers,  such  as  three  and  seven,  grow  monotonously  familiar;  and 
suggest  man's  incapacity  to  formulate  a  conception  of  the  Divinity, 


Bk.  Ill  Object  and  Method  of  Inquiry  363 

independent  of  these  not  extraordinarily  inspiring  fixed  formulas.  This 
is  a  field,  however,  outside  the  present  inquiry.  It  may  be  developed 
through  the  original  sources  of  information,  or  in  the  interesting  works 
of  Douglas,  James  Legge,  Mills,  Carey,  Sir  William  Jones,  Colebrooke, 
Burnouf,  Smith,  Whitney,  Max  Miiller,  Budge,  Deussen  and  a  host 
of  able  and  trustworthy  scholars.  The  travels  of  Father  Hue  might 
also  be  mentioned  in  this  connexion,  bringing  as  they  do,  in  the  words  of 
Doctor  White,^  "to  the  notice  of  the  world  the  amazing  similarity  of  the 
ideas,  institutions,  observances,  ceremonies,  and  ritual,  and  even  the 
ecclesiastical  costumes  of  the  Buddhists  to  those  of  his  own  church." 
These  similarities,  Father  Hue  traces^  through  "  '  the  crozier,  the  mitre, 
the  dalmatic,  the  cope  or  pluvial,  which  the  grand  lamas  wear  on  a  journey 
or  when  they  perform  some  ceremony  outside  the  temple,  the  service 
with  a  double  choir,  psalmody,  exorcisms,  the  censer  swinging  on  five 
chains,  and  contrived  to  be  opened  or  shut  at  will,  benediction  by  the 
lamas  with  the  right  hand  extended  over  the  heads  of  the  faithful,  the 
chaplet,  sacerdotal  celibacy,  Lenten  retirements  from  the  world,  the 
worship  of  saints,  fasts,  processions,  litanies,  holy  water  —  these  are 
the  points  of  contact  between  the  Buddhists  and  ourselves.'  The  good 
Abbe  has  by  no  means  exhausted  the  list,  and  might  have  added  *  con- 
fessions, tonsure,  relic  worship,  the  use  of  flowers,  lights,  and  images 
before  shrines  and  altars,  the  sign  of  the  cross,  the  Trinity  in  unity,  the 
worship  of  the  Queen  of  Heaven,  the  use  of  religious  books  in  a  tongue 
unknown  to  the  bulk  of  the  worshippers,  the  aureole  or  nimbus,  the  crown 
of  saints  and  Buddhas,  wings  to  angels,  penance,  flagellations,  the 
flabellum  or  fan,  popes,  cardinals,  bishops,  abbots,  presbyters,  deacons, 
the  various  architectural  details  of  the  Christian  temple  '  and  so  forth. 
To  this  list,  Balfour^ s  Cyclopcedia  of  India  adds,  '  amulets,  medicines, 
illuminated  missals';  and  Mr.  Thompson^  'baptism,the  mass, requiems.'" 
The  subject  of  the  reiteration  of  the  same  ideas  throughout  the  entire 
field  of  formal  religion  is  interestingly  reviewed,  and  an  introduction  to 
a  larger  portion  of  its  literature  presented,  in  a  work  entitled  Bible  Myths 
and  their  Parallels  in  other  Religions.'^ 

Within  the  higher  fields  of  theological  speculation,  the  tendency  of  the 
theological  mind  to  repeat  itself  is  not  less  marked. 


*  A  History  of  the  Warfare  of  Science  with  Theology,  Vol.  II.,  p.  380. 

'  Buddhism  in  Christianity,  by  Arthur  Lillic  in  Religious  Systems  of  the  World,  p.  164. 

'  Illustrations  of  China,  Vol.  II.,  p.  18. 

«  Bouton,  New  York,  1883. 


364  Religion  Pt.  IV 

Says  Doctor  Legge,^  in  comparing  the  thought  of  the  Chinese  philos- 
opher, Mencius,  with  that  of  Bishop  Butler,  "In  fact,  that  philosopher, 
born  rather  more  than  two  thousand  years  before  Bishop  Butler,  devel- 
oped a  theory  of  human  nature  in  which  he  anticipated  every  important 
point  insisted  on  by  the  Christian  prelate." 

Doctor  White  touches  this  phase  of  the  subject  briefly  but  interestingly 
in  the  closing  chapter  of  his  Warfare  of  Science  with  Theology,  where  an 
introduction  to  a  portion  of  its  literature  will  be  found.  This  second 
class  of  what  might  be  called  metaphysico-theological  speculation,  pre- 
sents a  natural  process  of  evolution  and  repetition,  doubtless  of  a  certain 
historical  and  psychological  interest,  but  radically  removed  from  the 
fountain-heads  of  the  creeds  round  which  it  revolves. 

The  ultimate  sources  are  largely  independent  of  the  fixed  ideas  shot 
up,  so  to  speak,  in  their  neighbourhood,  and  of  the  cycles  of  theological 
and  metaphysical  speculation  revolving  about  these. 

In  order,  therefore,  to  come  in  direct  contact  with  ultimate  religious 
conceptions  alone,  inquiry  at  once  refers  to  the  single  source  from  which 
each  system  takes  its  rise,  and  theological  and  metaphysical  substrata 
are  regarded  as  beyond  the  field  chosen  for  review. 

In  order  to  apply  to  the  fountain-heads  of  inspiration  which  have 
dominated  the  religious  thought  of  the  world,  with  the  object  of 
discovering  their  teachings,  it  is  necessary:  First,  to  formulate 
an  exact  conception  of  what  is  meant  by  religion;  second,  to  in- 
terrogate the  final  authority  of  all  religions  considered  with  refer- 
ence to  these  conceptions.  The  first  question  then^,  is:  What  is  a  re- 
ligion? 

The  well  qualified  observer.  Sir  Monier  Monier-Williams,^  says  with 
reference  to  that  which  constitutes  a  religion:  (i)  "Every  system 
claiming  to  be  a  religion  in  the  proper  sense  of  the  word  must  postulate 
the  eternal  existence  of  one  living  and  true  God  of  infinite  power."  (2) 
"It  must  reveal  some  method  by  which  the  finite  creature  may  com- 
municate with  the  infinite  Creator."  (3)  "It  must  also  take  for 
granted  the  immortality  of  man's  soul  or  spirit,  and  the  reality  of  a 
future  state."  (4)  "It  is  most  undeniably  true  that  religion  must  of 
necessity  imply  morality." 

Whether  or  not  this  definition  is  accepted  in  the  letter,  it  is  essential 
that  any  system  of  thought  purporting  to  be  religious,  must  adopt  some 


>  The  Religions  of  China,  p.  103. 
•  Buddhism,  pp.  338,  S39- 


Bk.  Ill  Object  and  Method  of  Inquiry  365 

position  with  reference  to  the  four  issues  suggested:  (i)  Divinity, 
(2)  Mediation,  (3)  Immortality,  (4)  Morality,  or  Ethics, 

In  order,  therefore,  to  examine  the  doctrines  of  a  religion  as  such,  its 
teachings  may  be  referred  to  these  four  headings  which  may  thus  serve 
as  a  standard  of  comparison.  With  this  method  the  examination  of 
hopelessly  voluminous  material  is  unnecessary,  Confucius,  Buddha 
or  Christ,  are  regarded  as  knowing  best  what  they  taught,  with  refer- 
ence to  those  problems  called  religious.  These  questions  can  be  answered 
in  a  few  simple  words  of  the  founders  of  the  creeds. 

Four  direct  questions  alone  are  here  to  be  asked  of  the  great  religious 
teachers  of  the  World:  (i)  God?  (2)  Mediation?  (3)  Immortal- 
ity?    (4)    Ethics? 


CHAPTER  II  ^ 

LAO-TSZE 

TO  THE  north  and  east  of  central  Asia,  spreads  that  group  of 
tongues  and  religions  regarded  by  Professor  Miiller  as  belong- 
ing  to   the  Turanian  branch  of  the  human  family;   that 
branch  neither  Aryan  nor  Semetic.     Two  great  figures  dom- 
inate these  creeds  and  tongues:  the  mysterious  Lao-tsze  and  Confucius. 
These  two  men  were  contemporaries,  although,  Lao-tsze  was  much  the 
elder. 

Lao-tsze,  the  "old  philosopher"  of  China,  is  among  the  most  suggestive 
of  thinkers.  The  Tao  Teh  King  reveals  one  of  the  most  profound, 
although  one  of  the  most  illusive  of  personalities:  "a  superior  man,  who 
liked  to  keep  himself  unknown." ^  His  contribution  to  religious  thought 
is  the  briefest  of  such  works,  yet  among  the  noblest  and  most  instructive. 
He  seems  always  on  the  verge  of  developing  some  great  discovery,  which, 
he  knows  must  elude  him;  a  discovery  which  he  tries  to  touch,  but  to 
find  it  intangible;  he  listens  and  looks  for  it,  to  find  it  inaudible  and 
invisible;  he  tries  to  tell  of  it,  but  knows  that  words  will  fail. 

"There  is  an  Infinite  Being,  which  existed  before  heaven  and  earth, 

How  calm  it  is!    How  free! 

It  lives  alone,  it  changes  not. 

It  moves  everywhere,  but  it  never  suffers. 

We  may  look  on  it  as  the  Mother  of  the  Universe. 

I,  I  know  not  its  name. 

In  order  to  give  it  a  title,  I  call  it  Tao  (the  way). 

When  I  try  to  give  it  a  name,  I  call  it  Great. 

After  calling  it  Great,  I  call  it  Fugitive. 

After  calling  it  Fugitive,  I  call  it  Distant. 

After  calling  it  Distant,  I  say  it  comes  back  to  me.'" 

There  are  few  more  suggestive  attempts  to  conceive  the  inconceivable 
and  formulate  that  which  the  finite  mind  can  never  formulate,  than  in 
the  Tao  Teh  King.     This,  then,  is  the  God  of  Lao-tsze:  an  infinite,  eternal 


I  Legge.     Texts  oj  Taoism,  Pt.  I.    Sacred  Books  of  the  East,  Vol.  XXXIX.,  p.3S. 
•  Tao  Teh  King,  XXV.    Translation  in  Professor  MuUer's  Science  of  Religion,  p.  1 14. 

366 


Bk.  Ill  Lao-tsze  367 

being,  from  which  all  things  are  derived  and  which  is  incapable  of 
definition  by  the  finite  human  mind. 

With  reference  to  the  second  question  of  religious  inquiry,  Lao-tsze  is 
silent;  he  himself  pretends  to  no  inspiration  from  heaven,  and  points  to 
the  Tao,  or  the  Way,  as  the  path  to  the  Great  Beyond.  "The  relation 
of  the  Tao  to  all  the  world,"  he  says,^  "is  like  that  of  the  great  rivers 
and  seas  to  the  streams  from  the  valleys." 

With  reference  to  immortality,  the  following  passage  may  be  cited  r^ 
"But  I  have  heard  that  he  who  is  skillful  in  managing  the  life  entrusted 
to  him  for  a  time  travels  on  the  land  without  having  to  shun  rhinoceros 
or  tiger,  and  enters  a  host  without  having  to  avoid  buff  coat  or  sharp 
weapon.  The  rhinoceros  finds  no  place  in  him  into  which  to  thrust 
his  horn,  nor  the  tiger  a  place  in  which  to  fix  his  claws,  nor  the  weapon  a 
place  to  admit  its  point.  And  for  what  reason?  Because  there  is  in 
him  no  place  of  death." 

Like  the  great  and  wise  man  he  is,  he  goes  into  no  detail  with  reference 
to  life  after  death. 

Ethically,  the  conceptions  of  Lao-tsze  are  identical  with  those  of 
Buddha,  Christ,  Socrates,  and  the  greatest  ethical  teachers.  "To  those 
who  are  good  (to  me), "  he  says,^  "I  am  good;  and  to  those  who  are  not 
good  (to  me),  I  am  also  good;  and  thus  (all)  get  to  be  good.  To 
those  who  are  sincere  (with  me),  I  am  sincere;  and  to  those  who  are  not 
sincere  (with  me),  I  am  also  sincere;  and  thus  (all)  get  to  be  sincere." 
He  distinctly  says^  to  return  good  for  evil:  "It  is  the  way  of  the  Tao 
.     .     .     to  recompense  injury  with  kindness." 

These  passages  are  typical  of  all  that  Lao-tsze  says  with  reference  to 
the  subjects  discussed.  The  four  questions  have  now  been  answered  in 
the  words  of  the  founder  of  Taoism,  and  may  be  briefly  summarized: 
(i)  He  recognizes  an  infinite,  spiritual  Divinity.  (2)  He  is  silent 
or  obscure  as  to  the  method  of  communication  with  man,  but  points  to 
the  Tao  as  the  means  of  such  communication.  (3)  He  recognizes  man's 
immortality,  and,  in  his  comparison  of  the  relation  of  the  Tao  to  the 
world,  as  that  of  the  sea  and  the  great  rivers  to  the  streams  of  the  valleys, 
he  seems  to  regard  man's  union  with  God,  or  the  Tao,  as  the  highest 
form  of  immortality.  (4)  He  preaches  a  noble  and  elevated  system  of 
ethics. 


'  Tiio  Teh  Kins,  XXXII.,  s-  Translation  by  Doctor Legge.  Sacred  Books  of  the  East.Vol  XXXIX.,  p.  75. 
'  Ibid.,  L.,  4,  p.  Q2. 
«  Ibid.,  XLIX,  2,  p.  Qi. 
*  Ibid.,  LXIII.,  I,  p.  106. 


368  Religion  Pt.  IV 

Popular  Taoism  presents  slight  relation  to  the  thought  of  this  great 
man :  "  No  polytheism  could  be  more  pronounced,"  says  Doctor  Legge,  ^ 
"or  more  grotesque,  with  hardly  a  single  feature  of  poetic  fancy  or 
aesthetical  beauty."  Again,^  "That  the  name  of  the  system  of 
thought  and  of  the  man  should  be  identified,  as  they  are,  with  the  base 
religion  described,     ...    is  a  mystery  at  present  inexplicable." 


>  The  Religions  of  China,  p.  170. 
i  Ibid.,  p.  229. 


CHAPTER  III 

CONFUCIUS 

THE  great  Confucius  is  the  second  important  figure  met  in 
Eastern   thought.     The  teachings  of    Confucius   are   more 
secular  than  those  of  Lao-tsze.     The  latter  seems  to  have 
developed  his  system  chiefly  from  meditation  and  introspec- 
tion; while  Confucius,  to  use  his  own  words,  was  a  "transmitter  and 
not  a  maker,  believing  in  and  loving  the  ancients."^ 

With  reference  to  God,  Confucius  is  almost  completely  silent;  "not 
once  throughout  the  Analects  does  he  use  the  personal  name,"  says  his 
translator."^  "  But,"  said  the  Master,^  "there  is  Heaven;  —  that  knows 
me";  and  whether  or  not  Confucius  may  be  supposed  to  recognize  a 
God,  depends  entirely  upon  the  interpretation  of  the  Chinese  word  for 
"Heaven."  Confucius  looked  upon  man  as  a  member  of  society, and 
paid  little  or  no  attention  to  questions  relating  to  God,  divine  origin  or 
immortality.  On  the  contrary,  his  mind  seems  to  have  dwelt  chiefly 
upon  past  customs,  records,  history,  and  literature,  and  it  is  rather  to  his 
scholarship  and  intellectual  ability  that  he  owes  his  greatness  than  to 
peculiarly  religious  thought.  "I  would  say  that  he  was  unreligious 
rather  than  irreligious,"  says  Legge.'* 

With  reference  to  life  after  death,  the  Master  is  non-committal.  Tsze- 
kung  asks,  "Do  the  dead  have  knowledge  (of  our  services,  that  is),  or 
are  they  without  knowledge?"  The  Master  replied:  "If  I  were  to  say 
that  the  dead  have  such  knowledge,  I  am  afraid  that  filial  sons  and 
dutiful  grandsons  would  injure  their  substance  in  paying  the  last 
offices  to  the  departed ;  and  if  I  were  to  say  that  the  dead  have  not  such 
knowledge,  I  am  afraid  lest  unfilial  sons  should  leave  their  parents  un- 
buried.  You  need  not  wish,  Tsze,  to  know  whether  the  dead  have  knowl- 
edge or  not.  There  is  no  present  urgency  about  the  point.  Hereafter  you 
will  know  it  for  yourself. "°      "To  give  one's  self  earnestly  to  the  duties 


»  Analects,  VII.  r..    Translation  by  Doctor  Legge,  Sacred  Books  of  the  East,  Vol.  I.,  p.  195. 

•  Ibid.,  p.  gg. 

•  Ibid.,  XIV.  37.  p.  289. 

•  Ibid.,  p.  gg. 

•  Ibid. 

369 


370  Religion  Pt.  IV 

due  to  men,"  said  the  Master/  "and,  while  respecting  spiritual  beings, 
to  keep  aloof  from  them,  may  be  called  wisdom."  "While  you  do  not 
know  life"  he  asks^  "how  can  you  know  about  death?"  Spiritual 
beings^  were  among  the  subjects  "on  which  the  Master  did  not  talk." 
These  few  simple  phrases  of  Confucius,  with  reference  to  subjects  pre- 
senting no  definite  material  for  inquiry,  demonstrate  the  wisdom  and 
sincerity  of  the  ancient  sage  of  China. 

The  ethics  of  Confucius,  while  perhaps  not  upon  the  same  plane  as  those 
of  Lao-tsze,  are  noble,  explicit,  and  intelligible.  He  dwells  upon  the 
importance  of  truth  and  truthfulness  at  all  times.  "I  do  not  know," 
he  says^  "how  a  man  without  truthfulness  is  to  get  on.  How  can  a 
large  carriage  be  made  to  go  without  the  cross-bar  for  yoking  the  oxen 
to,  or  a  small  carriage  without  the  arrangement  for  yoking  the  horses?  " 
His  most  famous  phrase  is  the  reply  to  his  disciple,  Tsze-kung,  who  asked: 
"Is  there  one  word  which  may  serve  as  a  rule  of  practice  for  all  one's 
life? "  "Is  not  Reciprocity  such  a  word? "  said  Confucius. ^  "  What  you 
do  not  want  done  to  yourself,  do  not  do  to  others."  Confucius  repeats^ 
this  phrase  in  the  Doctrine  of  the  Mean.  This  is  the  golden  rule  of 
Christianity  in  its  negative  sense.  Confucius  seems  to  have  appre- 
ciated its  positive  application  as  well ,  and  expresses  his  regret'^  at  not  hav- 
ing "set  the  example  in  behaving  to  a  friend,  as  I  would  require  him 
to  behave  to  me." 

The  thought  of  Confucius  is  thus  chiefly  of  a  non-religious  nature, 
and  consequently  he  has  nothing  to  say  with  reference  to  communication 
with  the  Divinity  or  his  own  inspiration.  "I  am  not  one  who  was  born 
in  the  possession  of  knowledge,"  he  says;^  "I  am  one  who  is  fond  of 
antiquity,  and  earnest  in  seeking  it  there. ' '  These  passages  are  sufficiently 
t)qDical  to  permit  the  following  summary  of  the  views  of  Confucius  with 
reference  to  the  four  fundamental  problems  of  religious  inquiry:  as  to 
the  Divinity,  he  is  vague  and  non-committal.  The  same  may  be  said 
of  his  views  of  man's  immortality;  he  regards  himself  as  in  no  way  in- 
spired; and  preaches  an  elevated  code  of  ethics  and  morality. 

The  pure  spring  alone,  as  it  wells  from  the  master's  mind,  is  found  in 

1  Ibid.,  VI,  20,  p.  iQi. 

2  Ibid.,  XI,  II,  p.  241. 

'  Ibid.,  VII,  20,  p.  201. 
*  Ibid.,  II,  22,  p.  153. 
5  Ibid.,  XV,  25,  p.  301. 
«  Ibid.,  XIII,  13,  p.  394. 
'  Ibid. 
'  Ibid.,  VII,  ig,  p.  201. 


gl^^  III  Confucius  371 

thought  of  this  nature  at  its  source.  As  it  passes,  however,  through 
endless  channels  of  interpretation  and  exposition,  and  into  the  minds  of 
those  unable  to  receive  or  contain  it,  the  clear  waters  are  drained  into 
swamps  and  quicksands,  or  lie  in  stagnant  pools.  Such  has  been  the 
fate  of  the  teachings  of  Lao-tsze  and  Confucius;  it  is  beside  the  present 
purpose  to  follow  them  through  these. 


CHAPTER  IV 

BRAHMANISM 

THE  home  of  another  group  of  religions,  chief  among  which 
are  the  great  systems  of  Brahmanism  and  Buddhism,  lies 
to  the  south  of  the  Himalayas. 
"Veda,  Upanishad,  Sutra^  — poetry,  philosophy,  prayer." 
.  .  .  .  Here  in  the  sacred  books  of  the  Brahmans  is  the  real  re- 
ligious fervour  of  the  East,  possessed  as  they  are  *'by  the  infinite  desire 
for  spiritual  knowledge.  With  incessant  questioning  they  beset  the 
mystery  of  being.  The  S vetas vatara  opens  thus :  '  The  seekers  converse 
together.  What  form  of  cause  is  Brahma?  Whence  are  we?  By 
whom  do  we  live  and  where  at  last  abide?  By  whom  are  we  governed? 
Do  we  walk  after  a  law,  in  joy  and  pain,  O  ye  knowers  of  God? '  And  the 
Kena  thus:  'By  whom  decreed  and  appointed  does  the  mind  speed  to  its 
work?'  The  Mitri  asks:  'How  can  the  soul  forget  its  origin?  How, 
leaving  its  selfhood,  be  again  united  thereto? '  In  Yajnavalkya's  Code, 
the  munis  inquire  of  their  chief:  'How  has  this  world  come  into  being, 
with  gods,  spirits,  and  men;  and  how  the  soul  itself ?>  Our  minds  are 
dark;  enlighten  us  on  these  things." 

What  answer  is  found  to  these  questions  in  the  sacred  texts  of  India? 
A  study  of  the  Vedantic  writings  leads  to  the  Upanishads  as  the  highest 
development  of  the  religious  thought  of  the  Brahmans,  and  the  essence 
of  the  Upanishads  may  be  expressed  in  two  words  and  a  symbol: 

Brahman  =  Atman. 
Man  is  divine. 
As  Deussen'  says:     "If  for  our  present  purpose  we  hold  fast  to  this 
distinction  of  the  Brahman  as  the  cosmical  principle  of  the  universe,  the 
atman  as  the  psychical,  the  fundamental  thought  of  the  entire  Upanishad 
philosophy  may  be  expressed  in  the  simple  equation: 

Brahman  =  Atman. 
"That  is  to  say  —  the  Brahman,  the  power  which  presents  itself 
materialized  in  all  existing  things,  which  creates,  sustains,  preserves, 

'  Oriental  Religions,  India.  Johnson,  p.  336. 

»  The  Religion  and  Philosophy  of  India.     The  Upanishads.     Translated  by  Rev.  A.  S.  Geden,  M.  A. 
p.  39. 


Bk.  Ill  Brahmanism  3^3 

and  receives  back  into  itself  again  all  worlds,  this  eternal  infinite  divine 
power  is  identical  with  the  atman,  with  that  which,  after  stripping  off 
everything  external,  we  discover  in  ourselves  as  our  real  most  essential 
being,  our  individual  self,  the  soul.  This  identity  of  the  Brahman  and 
the  atman,  of  God  and  the  soul,  is  the  fundamental  thought  of  the 
entire  doctrine  of  the  Upanishads." 

In  the  twelfth  Khanda  of  the  sixth  Prapathaka  of  the  Khandogya- 
Upanishad,  a  father  bids  his  son  bring  the  fruit  of  the  Nyagrodha  tree. 
"Break  it,"  he  commands.^  "What  do  you  see  there?"  he  asks. 
"These  seeds,  almost  infinitesimal,"  replies  the  son.  "Break  one 
of  them,"  commands  the  father,  and  again  asks  what  the  son  sees  therein. 
"Nothing,"  is  the  answer.  "My  son,"  says  the  father,  "that  subtile 
essence  which  you  do  not  perceive  there,  of  that  very  essence  this  great 
Nyagrodha  tree  exists."  Then  comes  the  pregnant  sentence  containing 
the  "great  saying"  of  the  Vedanta  philosophy: 

"Etadatmyam  idam  sarvam,  tat  satyam,  sa  atma,  tat  tuam  asi 
Svetaketu." 

Anquetil  Duperron^  translates  this  passage  as  follows:  "Ipso  hoc 
modo  (ens)  illud  est  subtile:  et  hoc  omne,  unus  atma  est:  et  id  verum 
et  rectum  est,  O  Sopatkit,  tatoumes,  id  est,  ille  atma  tu  as." 

Deussen^  renders:  "Glaube,  O  Teurer,  was  jene  Feinheit  ist,  ein 
Bestehen  aus  dem  ist  dieses  Weltall,  das  ist  das  Reale,  das  ist  die  Seele, 
das  bist  du,  O  Cvetaketu." 

Rajendralal  Mitra*  interprets:  "All  this  universe  has  the  (Supreme) 
Deity  for  its  life.  That  Deity  is  Truth.  He  is  the  Universal  Soul. 
Thou  art  He,  O  Svetaketu." 

Professor  Muller^  elaborates  the  thought  in  slightly  different  terms: 
"That  which  is  the  subtile  essence  (the  Sat,  the  root  of  everything), 
in  it  all  that  exists  has  its  self,  or,  more  literally,  its  selfhood.  It  is 
the  True  (not  the  Truth  in  the  abstract,  but  that  which  truly  and  really 
exists).  It  is  the  Self,  i.  e.,  the  Sat  is  what  is  called  the  Self  of  every- 
thing. Lastly,  he  sums  up,  and  tells  Svetaketu  that,  not  only  the  whole 
world,  but  he  too  himself  is  that  Self,  that  Satya,  that  Sat." 

When  this  elemental  thought  of  the  Upanishads  is  grasped  in  its 
completeness,  it  may  seem  that  therein  the  religious  imagination  exhausts 

» Sacred  Books  of  the  East,  Vol.  I.  The  Upanishads,  Pt.  I.,  p.  104.  Translated  by  Prof.  Max 
MiUler. 

*  Ibid.,  p.  XXXV. 

»  Sechtig  Vpanishad's  des  Veda,  p.  168. 

*  Sacred  Books  of  the  East,  Vol.  I.,  p.  xxxv. 

*  Ibid.,  p.  XXXVI. 


374  Religion  Pt.  IV 

itself.  It  can  go  no  farther.  After  endless  searchings  and  importunings, 
the  finite  here  loses  itself  in  the  infinite  and  ceases  its  quest  —  "As  a 
bird  when  tied  by  a  string  flies  first  in  every  direction,  and  finding  no 
rest  anywhere,  settles  down  at  last  on  the  very  place  where  it  is 
fastened."^ 

The  finite  thus  becomes  the  infinite,  and  the  infinite  the  Self.  No  more 
elevated  conception  of  man  in  his  relation  to  the  Divinity  can  be  for- 
mulated. Religion  can  take  him  no  farther;  faith  can  bring  him  no 
nearer  to  God.  "As  the  flowing  rivers  disappear  in  the  sea,  losing  their 
name  and  their  form,  thus  a  wise  man,  freed  from  name  and  form,  goes 
to  the  divine  Person,  who  is  greater  than  the  great.  He  who  knows 
that  highest  Brahman  becomes  even  Brahman.  In  his  race  no  one 
is  born  ignorant  of  Brahman.  He  overcomes  grief,  he  overcomes  e\dl; 
free  from  the  fetters  of  the  heart,  he  becomes  immortal."^ 

Says  Deussen:^  "If  we  strip  this  thought  of  the  various  forms, 
figurative  to  the  highest  degree  and  not  seldom  extravagant,  under 
which  it  appears  in  the  Vedanta  texts,  and  fix  our  attention  upon  it 
solely  in  its  philosophical  simplicity  as  the  identity  of  God  and  the  soul, 
the  Brahman  and  the  atman,  it  will  be  found  to  possess  a  significance 
reaching  far  beyond  the  Upanishads,  their  time  and  country;  nay,  we 
claim  for  it  an  inestimable  value  for  the  whole  race  of  mankind.  We  are 
unable  to  look  into  the  future,  we  do  not  know  what  revelations  and 
discoveries  are  in  store  for  the  restlessly  inquiring  human  spirit;  but 
one  thing  we  may  assert  with  confidence,  —  whatever  new  and  unwonted 
paths  the  philosophy  of  the  future  may  strike  out,  this  principle  will 
remain  permanently  unshaken,  and  from  it  no  deviation  can  possibly 
take  place.  If  ever  a  general  solution  is  reached  of  the  great  riddle, 
which  presents  itself  to  the  philosopher  in  the  nature  of  things  all  the 
more  clearly  the  further  our  knowledge  extends,  the  key  can  only  be 
found  where  alone  the  secret  of  nature  lies  open  to  us  from  within,  that 
is  to  say,  in  our  innermost  self.  It  was  here  that  for  the  first  time  the 
original  thinkers  of  the  Upanishads,  to  their  immortal  honour,  found  it 
when  they  recognized  our  atman,  our  inmost  individual  being,  as  the 
Brahman,  the  inmost  being  of  universal  nature  and  of  all  her  phenomena." 

Professor  Miiller,'*  in  his  work  on  the  Vedanta  philosophy  says:  "Their 
whole  philosophy  was  built  on  the  conviction  that  every  human  being 

•  Ibid.,  Kahndogya-Upanishad,  VI.  Prapalhaka,  8.    Khanda,  p.  99. 

'  Mnndaka-Upanishad,  III.     Muiflaka,  2  Khanda,  8,  9.     Sacred  Books  of  the  East,  Vol.  XV.,  p.  41. 
3  The  Religion  and  rhilosophy  of  India.    The  Upanishads,  translation  by  Rev.  A.  S.  Geden,  p.  39. 

*  The  Vedanta  Philosophy,  pp.  168-170. 


Bk.  Ill  Brahmanism  375 

has  its  true  being  in  Brahman,  and  this  feeling,  though  it  is  chiefly  meta- 
physical, breaks  out  occasionally  as  a  moral  power  also.  We  say,  We 
should  love  our  neighbour  as  ourselves.  The  Vedantist  says,  We  should 
love  our  neighbours  as  ourself ;  that  is,  we  should  love  them  not  for  what 
is  merely  phenomenal  in  them,  for  their  goodness,  or  beauty,  or  strength, 
or  kindness,  but  for  their  soul,  for  the  divine  Self  in  all  of  them.  Thus, 
in  the  Upanishads  an  old  sage,  who  takes  leave  of  his  two  wives  when 
retiring  into  the  forest,  says  to  his  beloved  Maitreyi  {Brih.  Ar.  II.,  4): 
'Thou  who  art  truly  dear  to  me,  thou  speakest  dear  words.  Come  sit 
down,  I  will  explain  it  to  thee,  and  mark  well  what  I  say.'  And  he  said: 
'Verily,  a  husband  is  not  dear,  that  you  may  love  the  husband;  but  that 
you  may  love  the  Self,  therefore  a  husband  is  dear.  Verily,  a  wife  is 
not  dear,  that  you  may  love  the  wife;  but  that  you  may  love  the  Self, 
therefore  a  wife  is  dear.' 

"This  is  carried  on  to  sons,  and  friends,  to  the  gods  and  all  creatures 
they  all  are  to  be  loved,  not  for  themselves  as  they  appear,  but  for  the 
Self  that  is  in  them,  for  their  eternal  Self,  for  that  universal  Self  in  which 
we  all  share,  in  which  we  all  live  and  move  and  have  our  being.  Like 
many  a  truth  in  Eastern  religion,  this  truth  also,  that  in  loving 
our  neighbour  we  really  love  God,  and  that  in  lo\dng  our 
neighbour  w'e  love  ourselves,  has  sometimes  been  carried  to 
an  extreme,  till  it  became  a  caricature.  But,  nevertheless,  it 
shows  an  enormous  amount  of  intellectual  labour  to  have  rea- 
soned out  that  we  should  love  our  neighbour,  because  in  loving 
him  we  love  God,  and  in  loving  God,  we  love  ourselves.  The  deep 
truth  that  lies  hidden  in  this,  was  certainly  not  elaborated  by  any  other 
nation,  so  far  as  I  know. 

'  "So  much  to  show  that  the  Vedanta  philosophy,  abstruse  as  its  meta- 
physics are,  has  not  neglected  the  important  sphere  of  Ethics,  but  that, 
on  the  contrary,  we  find  ethics  in  the  beginning,  ethics  in  the  middle, 
and  ethics  in  the  end,  to  say  nothing  of  the  fact  that  minds  so  en- 
grossed with  divine  things  as  the  Vedanta  philosophers,  are  not  likely 
to  fall  victims  to  the  ordinary  temptations  of  the  world,  the  flesh,  and 
other  powers." 

The  God  of  the  Vedantists  is  an  infinite,  perfect,  spiritual 
Being  imminent  in,  and  external  to,  visible,  conscious  nature.  This 
Being  is  compared  to  light  and  air,  which,  while  streaming 
through  space  as  distinct  unities  themselves,  are  nevertheless 
the  media  through  which  all  the  vast  complex  of  individual  phenom- 


376  Religion  Pt.  IV 

ena  comes  into  being,  or  the  environment  within  which  it  continues  its 
existence.* 

"As  light,  as  one,  through  space  eternal  wells, 

And  yet  in  every  form  is  held  in  bond, 
The  inmost  Self  of  every  being  dwells 

In  every  form  —  and  yet  remains  beyond. 

"The  air,  as  one,  is  borne  through  boundless  space, 
Yet  round  each  form  it  ever  wells  and  wanes; 

And  so  the  inmost  Self  of  Being's  place 
Is  every  form  —  and  yet  without  remains. 

"The  sun,  the  eye  of  all  the  sweeping  spheres, 
Shines  free  from  fault  which  other  eyes  endure: 

E'en  so,  beyond  all  others'  pains  and  fears. 
Lives  Being's  inmost  Essence,  free  and  pure." 

The  God  of  the  Vedantists  is  not  only  perfect,  but  perfect  in  an  in- 
exhaustible degree  :2 

"For  perfect  this  and  perfect  that,  the  perfect  from  the  Perfect  grows; 
Take  perfect  from  the  perfect  still.  Perfection  ever  overflows." 

Deussen'  renders  this  passage: 

"Jenes  is  Voll,  und  voU  dieses, 
Aus  Vollem  Voiles  wird  geschopft; 
Zieht  man  von  Vollem  ab  VoUes, 
Bleibt  doch  das  Voile  iibrig  noch." 

The  Upanishads  are  regarded  as  essentially  inspired  writings.  Speak- 
ing of  Brahman  they  say: 

"Fire  is  his  head,  sun  and  moon  his  eyes. 
His  ears  the  regions  of  the  sky, 
His  voice  is  the  revelation  of  the  Veda. 
(Seine  Stimme  ist  des  Veda  Offenbarung)."* 

The  four  questions  of  religious  inquiry  may  now  be  answered  from 
the  sacred  scriptures  of  India:  God?  Immortality?  Meditation? 
Ethics? 

The  God  of  the  Upanishads  is  conceived  as  an  infinite,  perfect,  spiritual 

•  Kathaka-Upantshad  II.    Adhyaya,  5,  Valh.  9-1 1 

•  Brihadaranyaka-U panishad,  V  Adhyaya,  i  Brahmanam. 

•  Sechzig  Upanishad's  des  Veda,  p.  489. 

«  Mundaka-U panishad  2.  i .  4,  The  Religion  and  Philosophy  of  India.    Deussen,  Translation  by  Geden, 

p.  903. 


Bk.  Ill  Brahmanism  377 

Entity,  at  once  imminent  in,  and  external  to  phenomenal  nature,  and 
representing  the  elemental  essence  of  that  nature.  Man's  union  with 
this  Divinity  is  the  highest  form  of  immortality.  The  word  of  God  is 
echoed  in  the  inspired  words  of  the  Vedas.  The  system  of  ethics  and 
morality  of  the  Upanishads  is  as  elevated  as  any  formulated  by  human 
tongue. 

The  Upanishads,  then,  present  one  of  the  richest  and  most  inspiring 
of  religious  systems.  "In  the  whole  world,"  says  Schopenhauer* 
"  there  is  no  study  so  beneficial  and  so  elevating  as  that  of  the  Upanishads. 
It  has  been  the  solace  of  my  life,  it  will  be  the  solace  of  my  death." 

»  Cited  by  Professor  MUller,  The  Vendata  Philosophy,  p.  8.    , 


CHAPTER  V 

BXIDDmSM 

BUDDHISM,"  says  Sir  Monier  Monier- Williams/  "at  least 
in  its  earliest  and  truest  form,  is  no  religion  at  all,  but 
a  mere  system  of  morality  and  philosophy,  founded  on  a 
pessimistic  theory  of  life."  It  seems,  indeed,  impossible  to 
discover  any  statement  of  Gautama's  with  reference  to  the  existence 
of  a  Divinity  as  conceived  by  the  more  spiritual  religions  of  the  world. 
"As  regards  the  denial  of  a  Creator,  or  Atheism  in  the  ordinary  accepta- 
tion of  the  term,"  says  Professor  Miiller,^  "I  do  not  think  that  any  one 
passage  from  the  books  of  the  canon  known  to  us,  can  be  quoted  which 
contradicts  it,  or  which  in  any  way  presupposes  the  belief  in  a  personal 
God  or  a  Creator."  The  two  types  of  mind  already  discovered  in 
China,  appear  again  in  India.  One  turns  within,  to  a  spiritualistic,  or 
religious,  solution  of  the  problems  of  existence;  the  other  seeks  in 
objective  nature  more  rational  and  philosophic  explanations.  Thus,  if 
God,  meditation,  and  immortality  are  eliminated  from  the  thought  of 
Buddha,  his  ethical  teachings  become  the  centre  of  his  system. 

The  Dhammapada  presents,  perhaps,  the  nearest  approach  to  the 
words  of  Buddha  himself.  "If  we  may  consider,"  says  Professor  Miiller,^ 
"the  date  of  the  Dhammapada  firmly  established,  and  treat  its  verses, 
if  not  as  the  utterances  of  Buddha,  at  least  as  what  were  believed  by  the 
members  of  the  Council  under  Asoka,  in  246  B.  C,  to  have  been  the 
utterances  of  the  founder  of  their  religion,  its  importance  for  a  critical 
study  of  the  history  of  Buddhism  must  be  very  considerable,  for  we  can 
hardly  ever  expect  to  get  nearer  to  Buddha  himself  and  to  his  personal 
teachings."  The  attention  will  therefore  be  limited  to  the  Dhammapada; 
the  "Path  of  Virtue,"  or  the  "Footstep  of  the  Law."  The  verse  which 
D'Alwis  quotes  from  the  introduction^  of  Buddhaghosa's  commentary 
—  "The  Teacher  who  had  reached  the  very  depths  (lit.  bottom)  of 
Saddhamma,  preached  this  holy  Dhammapada"  —  shows  its  significance: 

'  Buddhism,  p.S37. 

'  Science  of  Religion,  p.  139. 

•  Science  of  Religion,  p.  165. 

*  Cf.  Sacred  Books  of  the  East,  Vol.  X.,  Dhammapada,  p.  liv. 

378 


Bk.  Ill  Buddhism  379 

"He  abused  me,  he  beat  me,  he  defeated  me,  he  robbed  me — in 
those  who  do  not  harbour  such  thoughts  hatred  will  cease." 

"  For  hatred  does  not  cease  by  hatred  at  any  time:  hatred  ceases  by 
love,  this  is  an  old  rule."^ 

"  We  live  happily  indeed,  not  hating  those  who  hate  us!  among  men 
who  hate  us  we  dwell  free  from  hatred.  "^ 

"  Let  a  man  overcome  anger  by  love,  let  him  overcome  evil  by  good; 
let  him  overcome  the  greedy  by  liberality,  the  liar  by  truth.  "^ 

"  He  who  has  no  wound  on  his  hand,  may  touch  poison  with  his  hand; 
poison  does  not  affect  one  who  has  no  wound;  nor  is  there  evil  for  one 
who  does  not  commit  evil."* 

"  These  wise  people,  meditative,  steady,  always  possessed  of  strong 
powers,  attain  to  Nirvana,  the  highest  happiness."^ 

What  is  this  "  highest  happin-ess,"  this  Nirvana  of  Buddhism?  The 
"  absolute  nothing/'  say  Burnouf  and  Miiller.^ 

"Om,  mani  padme,  om!  the  Dewdrop  slips  into  the  shining  seal"^ 

"The  snowflake  that  glistens  at  morn  on  Kailasa, 
Dissolved  by  the  sunbeams,  descends  to  the  plain : 
Then,  mingling  with  Gmiga,  it  flows  to  the  ocean, 
And  lost  in  its  waters  returns  not  Again." 

Thus  an  attempt  to  reach  the  religious  conceptions  of  Gautama  may 
result  in  the  following  brief  summary,  although  the  subject  is  involved 
in  almost  hopeless  obscurity.  With  reference  to  a  personal  self-con- 
scious Divinity,  he  is  silent  or  obscure.  Man's  immortality  and  com- 
munication with  God  are  necessarily  involved  in  the  same  silence  and 
obscurity.  He  preaches  as  elevated  conceptions  of  the  ethical  relations 
of  man  as  any  formulated;  identical  with  those  of  Lao-tsze  and  the 
Upanishads.  Burnouf,^  says  that  he  does  not  hesitate  to  translate 
the  Buddhist  mditri  by  the  term  universal  charity. 


iIbid.,lCh.  I.,4,  5.  p.  S. 

2  Ibid..  Ch.  XV.,  197,  p.  S4. 

«  Ibid.,  Ch.  XVII.,  223,  p.  S9. 

*  Ibid.,  Ch.  IX.,  124,  p.  35. 

^  Ibid.,  Ch.  II.,  23,  p.  9. 

'  Science  of  Religion,  p.  140.  , 

'  Edwin  Arnold,  Light  of  Asia,  p.  203. 

'  Buyer's  Recollections  of  Northern  India,  cited  by  Johnson,  Oriental  Religion,  India,  p.  362. 

'  Ld\Lotus  de  la  Bonne  Lot,  p.  300, 


CHAPTER  VI 

ZOROASTER 

THE  ancient  and  august  creed  of  Iran  and  the " Great  Kings" 
has  nearly  perished;  to  find  the  words  of  its  founder  among 
the  ruins  may  be  impossible.    There  remain  but  the  texts 
not  destroyed  by  Alexander,  and  whatever  light  history  and 
the  modern  Parsis  may  give. 

"It  has  long  been  felt  as  a  difficulty  of  no  ordinary  magnitude,"  says 
Rawlinson^  "to  reconcile  the  account  which  Herodotus,  Dino,  and  others 
give  of  the  ancient  Persian  religion  with  the  primitive  traditions  of  the 
Persian  race  embodied  in  the  first  Fargard  of  the  Vendidad,  which  are 
now  found  to  agree  remarkably  with  the  authentic  historical  notices 
contained  in  the  Achaemenian  monuments.  .  .  .  Throughout 
Herodotus  we  have  not  a  single  trace  of  Dualism;  we  have  not  even 
any  mention  of  Ormazd;  the  religion  depicted  is  purely  and  entirely 
elemental,  the  worship  of  the  sun  and  moon,  of  fire,  earth,  water,  and 
the  winds  or  air.  Conversely,  in  the  inscriptions  there  is  nothing  ele- 
mental ;  but  the  worship  of  one  Supreme  God,  under  the  name  of  Ormazd, 
with  perhaps  an  occasional  mention  of  an  Evil  Principle." 

This  conflict  of  sources  of  information  is  rendered  more  evident  upon 
further  inquiry,  and  whether  the  creed  of  Zoroaster  was  a  dualism,  or 
no  more  dualistic  than  the  popular  Christianity  of  modem  Europe, 
with  its  divine  and  satanic  principles,  will  depend  upon  the  selection 
and  interpretation  of  material  dealing  with  the  subject.  Ample 
support,  however,  may  be  found  for  the  opinion  that  the  the  religion  of 
old  Iran  was  as  essentially  monotheistic  as  any  of  the  great  creeds  of  the 
world.  Perhaps  the  nearest  approach  to  the  actual  thought  of  Zoroaster 
with  reference  to  God,  occurs  in  Eusebius;  this  passage,  Eusebius  cites  ^ 
as  containing  the  very  words  of  Zoroaster,  the  Magus,  in  the  holy  ritual 
of  the  worship  of  the  Persians. 

"The  God  of  the  falcon's  head  is  the  first,  incorruptible,  eternal,  un- 
generated,  indivisible,  utterly  unequalled,  controller  of  all  that  is  good, 

>  History  of  Herodotus,  Rawlinson,  Vol.  I.,  p.  346. 
'  Praep.  Evan.  I.,  52,  Vol.  I.,  p.  52. 

380 


Bk.  Ill  Zoroaster  381 

unapproachable  by  gifts,  the  best  of  the  best,  and  the  wisest  of  the  wise; 
the  father  of  all  justice  and  good  council,  self-taught,  natural,  perfect, 
intelligent  and  sole  discoverer  of  the  sacred  sum  of  things." 

The  Achaemenian  inscriptions  and  the  foregoing  passage  are  sup- 
ported by  the  creed  of  the  modern  Parsis,  as  shown  in  the  following 
extract^  from  one  of  their  catechisms: 

A  few  Questions  and  Answers  to  acquaint  the  Children  of  the  holy 
Zarthosti  Community  with  the  subject  of  the  Mazdiashna  Religion,  i.  e.,the 
Worship  of  God. 

Question. —  Whom  do  we,  of  the  Zarthosti  community,  believe  in  ? 

Answer. —  We  believe  in  only  one  God,  and  do  not  believe  in  any 
beside  Him. 

Question. —  Who  is  that  one  God  ? 

Answer. —  The  God  who  created  the  heavens,  the  earth,  the  angels, 
the  stars,  the  sun,  the  moon,  the  fire,  the  water,  or  all  the  four 
elements,  and  all  things  of  the  two  worlds;  that  God  we  believe  in. 
Him  we  worship.  Him  we  invoke.  Him  we  adore. 

This  seems  to  be  the  same  God  originally  invoked  by  Zoroaster 
himself. 

With  reference  to  immortality  the  Vendidad  says:^  "Gladly  pass  the 
souls  of  the  righteous  to  the  golden  seat  of  Ahura  Mazda,  to  the  golden 
seat  of  the  Amesha-Spentas,  to  the  Garo-nmanem,  the  abode  of  Ahura 
Mazda,  the  abode  of  the  Amesha-Spentas,  the  abode  of  all  the  other 
holy  beings."  In  the  Dinkard^  is  found:  "This,  too,  that  whoever 
gratifies  that  which  is  enjoyment,  renders  his  soul  immortal;  even  for 
this  reason,  because  the  soul  subsists  through  good  works,  and  good 
works  are  all  those  which  gratify  enjoyment." 

The  following  are  some  of  the  ethical  conceptions  of  the  creed :  "  Within 
perfect  diligence  in  industry  is  also  comprised  opposition  to  any  harm 
whatever,  and  it  is  opposition  to  harm  and  perfect  goodness  that  are 
worthy  of  every  happiness."*  "This,  too,  that  by  him  who  would  act 
for  the  pleasure  of  others,  owing  to  virtue,  the  growth  and  increase  owing 
to  Vohuman  are  produced."^ 

With  reference  to  meditation,  it  seems  that  Zoroaster  may  or  may  not 

'  Chips  from  a  German  Workshop,  Muller,  Vol.  I.,  p.  i6g. 

Zerui-Avesta.     Vendidad,  Fargard  XIX.,  32,  Sacred  Books  of  the  East,  Vol.  IV.,  p.  214. 
«  S.  B.  E.  Pahlavi  Texts,  Part  IV.,  Vol.  XXXVII.,  p.  339  (42). 
•  Ibid.,  (43). 
'  Ibid.,  (.,5). 


382  Religion  Pt.  IV 

be  regarded  as  divinely  inspired;  there  being  some  doubt  upon  the 
subject.^ 

A  study  of  the  most  authoritative  information  available  may  permit 
the  following  summary  of  the  creed  of  Zoroaster:  He  recognized  one 
omnipotent  and  supreme  Divinity;  intelligent  and  self-conscious.  Man's 
immortal  nature  appears  an  essential  element  of  his  system.  No  in- 
formation exists  establishing  whether  or  not  he  regarded  himself  a 
divinely  chosen  messenger.  The  moral  and  ethical  conceptions  of  the 
creed  are  noble  and  elevated. 

There,  then,  are  the  God  and  the  creed  of  the  great  Zoroaster;  and, 
as  preached  by  the  modern  Parsis,  "They  rest,"  in  the  words  of  Pro- 
fessor Miiller,^  "on  a  foundation  which  ought  never  to  be  touched,  a 
faith  in  one  God,  the  Creator,  the  Ruler,  and  the  Judge  of  the  World." 

I  Cf.  Miiller,  Chips  from  a  German  Workshop,  Vol.  I.,  pp.  170-171. 
>  Ibid,  p.  178. 


CHAPTER  VII 

EGYPT 

"Who  does  not  know  what  monsters  they  worship  in  Egypt  demented? 
Crocodiles  here  are  adored,  while  there,  in  another  place,  tremble 
Reverend  worshippers,  bowed  to  an  ibis!  sated  with  serpents; 
Sacred  apes  of  the  long  tail,  golden  images  flashing 
There  where  Memnon,  broken  in  twain,  makes  magical  music; 
Where  hes  Thebes,  old  Thebes,  with  her  hundred  of  portals  in  ruins. 
Here  whole  towns  bow  down  to  the  cats  and  the  fish  of  the  river; 
Others  worshipping  dogs;  but  never  they  worship  Diana. 
Sacred  are  onion  and  leek;  impiety  ever  to  taste  them; 
Holy  nation  of  men  whose  divinities  grow  in  their  gardensl" 

IN  DESCRIBING  the  creed  of  the  people,  Herodotus^  supports 
this  impression  of  Juvenal i^     "They  are  religious  to  excess,"  he 
says,  "far  beyond  any  other  race  of  men."     He  also  attributes^ 
to  Egypt  the  first  conceptions  of  immortality  and  transmigration 
of  the  soul. 

There  seems  undoubtedly  to  have  been  an  enormous  amount  of 
theological  complication  and  priest-craft  in  ancient  Egypt;  the  number 
and  variety  of  the  gods  is  oppressive,  and  every  locality  appears  to  have 
had  its  theogony.  There  is,  however,  another  side  to  the  religious 
thought  of  Egypt;  a  side  very  different  from  the  bundle  of  popular 
absurdities  and  superstitions  presented  by  Juvenal  and  others.  Ancient 
as  the  civilization  of  the  Nile  undoubtedly  was,  there  is  much  in  it 
traceable  to  Asiatic  influence. 

"Now  I  believe,  I  may  broadly  say,"  says  Bunsen,^  "that  the  fact 
to  which  I  allude,  viz.,  that  the  Egyptian  language  betrays  a  strictly 
historical  connection  with  Asia,  or,  to  speak  more  precisely,  with  the 
Semetic  and  Iranian  tribes,  is  among  those  who  have  studied  them 
according  to  the  critical  school  of  comparative  philology,  no  longer  an 
object  of  controversy."     "We  must  regard  the  Egyptians,  therefore," 

III.,  37.     Rawlinson,  Vol.  II.,  p  51. 
»  Satire  XV.,  i-io. 
'  II.,  123. 

*  Discourse  read  be/ore  (he  Ethnological  Section  of  the  British  Association  for  the  Advancement  of  Science. 
Oxiord,  June  28,  1847. 

383 


384  Religion  Pt.  IV 

says  Rawlinson,^  "as  an  Asiatic  people,  immigrants  into  their  own 
territory,  which  they  entered  from  the  east,  and  nearly  allied  to  several 
important  races  of  South- Western  Asia."  Few  better  accounts  of  the 
important  features  of  the  Egyptian  creed  may  be  foimd  than  in  the 
words  of  this  distinguished  scholar: 

"The  primary  doctrine  of  the  esoteric  religion  undoubtedly  was  the 
real  essential  Unity  of  the  Divine  Nature.  The  sacred  texts  taught  that 
there  was  a  single  Being,  'the  sole  producer  of  all  things  both  in  heaven 
and  earth,  Himself  not  produced  of  any'  — '  the  only  true  living  God 
self  originated'  —  '  who  exists  from  the  beginning'  —  'who  has  made  all 
things  but  has  not  Himself  been  made.'  This  Being  seems  never  to  have 
been  represented  by  any  material,  even  symbolical,  form.  It  is  thought 
that  He  had  no  name,  or,  if  He  had  that  it  must  have  been  unlawful 
either  to  pronounce  or  write  it.  He  was  a  pure  spirit,  perfect  in  every 
respect  —  all-wise,  almighty,  supremely  good."     .     .     . 

"It  is  difficult  in  many  cases  to  fix  on  the  exact  quality,  act,  or  part  of 
nature  intended;  but  the  principle  admits  of  no  doubt.  No  educated 
Egyptian  priest  certainly,  probably  no  educated  layman,  conceived  of 
the  popular  gods  as  really  separate  and  distinct  beings.  All  knew  that 
there  was  but  one  God,  and  understood  that  when  worship  was  offered 
to  Khem,  or  Kneph,  or  Phthah,  or  Maut,  or  Thoth,  or  Ammon,  the 
One  God  was  worshipped  under  some  one  of  His  forms  or  in  some  one 
of  His  aspects! "2.     .     .     . 

Transmigration  seems  to  have  involved  a  series  of  existences  until 
perfection  was  reached,  when  "finally  the  good  and  blessed  attained  the 
crowning  joy  of  the  union  with  God,  being  absorbed  into  the  Divine 
Essence,  and  thus  attaining  the  true  end  and  full  perfection  of  their 
being. "^  This  creed,  in  its  highest  conception  of  God  and  immortality, 
seems  identical  with  the  teachings  of  Lao-tsze  and  the  Upanishads. 

The  most  important  religious  relic  of  Egypt  is  the  celebrated  Book  of  the 
Dead.  Where  these  texts  were  written,  is  unknown.  "The  general 
testimony  of  their  contents,"  says  Budge,**  "indicates  an  Asiatic  home 
for  their  birthplace."  This  Book  seems  to  contain  the  essence  of 
Egyptian  religious  teachings;  the  essence  of  the  Book  of  the  Dead  is  the 
CXXVth  chapter,  and  the  essence  of  that  chapter  may  be  expressed 
in  one  word:    Truth.     In  this  impressive  allegory  the  soul  of  the  dead 

'  History  of  Ancient  Egypt,  Vol.  I.,  ch.  iii.,  p.  97. 

»  Ibid.,  Vol.  I.,  ch.  X.,  pp.  314-315. 

'  Ibid.,  p.  319. 

'  The  Book  oj  the  Dead,  Translation  by  Budge,  p.  idvi. 


Bk.  Ill  Egypt  385 

appears  before  the  judgment  seat  of  Osiris,  in  the  Hall  of  the  goddesses 
Isis  and  Nephthys,  who  symbolize  Right  and  Truth.  This  is  called  the 
Judgment  Hall  of  the  double  Maati,  or  the  Hall  of  Two  Truths.  Anubis 
balances  the  heart  of  the  dead  on  the  scales  with  the  symbol  of  Right  and 
Truth.  Thoth  records  the  result  of  the  weighing,  while  the  monster 
Am-met  stands  ready  to  devour  the  unjustified,  as  the  dead  man  urges 
his  claims  to  salvation.  "I  have  come,"  says  the  soul  of  the  dead^  to 
Osiris,  "and  I  have  drawn  nigh  to  see  thy  beauties;  my  hands  are  raised 
in  adoration  of  thy  name  'Right  and  Truth,'"  .  .  .  "Hail,  thou 
child,  who  comest  forth  from  the  Lake  of  Heq-at,  I  have  not  made 
myself  deaf  to  the  words  of  right  and  truth" 2.  .     and  again:' 

"I  live  upon  right  and  truth,  and  I  feed  upon  right  and  truth." 

In  this  chapter  occurs  the  "negative  confession"  of  the  Egyptian  creed 
showing  that  the  ethical  and  moral  conceptions  of  Egypt  were  the  same 
as  the  highest  ethical  and  moral  conceptions  of  any  other  creed.  The 
claims  of  the  deceased  before  the  judgment  seat  of  Osiris,  are  all  devoted 
to  showing  that  he  had  wronged  none  in  any  way.^  "The  Egyptian 
code  of  morals,"  says  Budge,^  "as  may  be  seen  from  the  CXXVth 
chapter,  was  the  grandest  and  most  comprehensive  of  those  now  known 
to  have  existed  among  the  nations  of  antiquity." 

The  Hymn  to  Ra  when  he  riseth  is  typical  of  the  best  of  the  Egyptian 
invocations  and  shows  their  conception  of  God.  "Thou  risest,  thou 
risest,  thou  shinest,  thou  shinest,  thou  who  art  crowned  king  of  the  gods. 
Thou  art  the  lord  of  heaven;  [thou  art]  the  lord  of  earth;  [thou  art]  the 
creator  of  those  who  dwell  in  the  heights  and  of  those  who  dwell  in  the 
depths.  [Thou  art]  the  God  One  who  came  into  being  in  the  beginning 
of  time.  Thou  didst  create  the  earth,  thou  didst  fashion  man,  thou  didst 
make  the  watery  abyss  of  the  sky,  thou  didst  form  Hapi  (i.e.,  the  Nile), 
thou  didst  create  the  watery  abyss,  and  thou  dost  give  life  unto  all  that 
therein  is.  Thou  hast  knit  together  the  mountains;  thou  hast  made 
mankind  and  the  beasts  of  the  field  to  come  into  being;  thou  hast  made 
the  heavens  and  the  earth.  ...  0  thou  divine  youth,  thou  heir 
of  everlastingness,  thou  self-begotten  one,  O  thou  who  didst  give  thy- 
self birth!  0  One,  mighty  [one],  of  myriad  forms  and  aspects,  king 
of  the  world,  Prince  of  Annu  (Heliopolis),  lord  of  eternity  and  ruler  of 

» Ibid.,  cxxv..  p.  188. 

'  Ibid.,  p.  IQS. 

'  Ibid.,  p.  197. 

*  Ibid.,  p.  clxix.  ' 

^  Ibid.,  p.  cbot. 


386  Religion  Pt.  IV 

everlastingness,  the  company  of  the  gods  rejoice  when  thou  risest  and 
when  thou  sailest  across  the  sky.  .  .  .  Thou  art  unknown  and  no 
tongue  is  worthy  to  declare  thy  likeness;  only  thou  thyself  [canst  do 
this].     Thou  art  One,  even  as  is  he  that  bringeth  the  tenP'  basket,  "^     . 

Chapter  LXIX  may  be  cited  as  illustrative  of  the  Egyptian's  con- 
ception of  his  union  with  the  Divinity  after  death.  "The  deceased  is 
always  identified  with  the  god  Osiris,"  says  Budge,^  "and  frequently 
called  by  the  god's  name." 

Thus  the  God  of  ancient  Egypt  seems  a  Divinity  very  like  the  one 
preached  by  Zoroaster,  by  Lao-tsze  and  the  Upanishads.  "It  is  per- 
fectly certain,"  says  Budge,^  "that  when  the  Egyptians  declared  that 
their  god  was  One,  they  meant  exactly  what  the  Hebrews  meant  when 
they  declared  that  Jehovah  was  One,  and  what  the  Arabs  meant,  and 
still  mean  when  they  cry  out  Allah  is  One.  At  all  events  the  One  god 
of  the  Egyptians  possessed  all  the  essential  attributes  of  the  Christian's 
God." 

In  Egypt,  then,  is  found  a  religious  system  which  in  its  highest  feat- 
ures may  be  summarized  as  follows:  An  infinite  intelligent.  Divinity, 
made  known  to  man  through  a  body  of  sacred  writings;  man's  union 
with  God  regarded  as  the  highest  form  of  immortality,  the  goal  of  all  his 
hopes.  With  these  is  combined  an  ethical  and  moral  system  inferior  to 
none;  based  upon  the  foundations  of  all  ethics  and  all  morality  — Right 
and  Truth. 


1  Ibid.,  pp.  S-g. 

'  Ibid.,  pp.  xcviii,  xcix. 

»  Ibid.,  p.  Ixxix. 


CHAPTER  VIII 

JUDAISM 

A  QUIVER  full  of  steel  arrows,"  says  Renan/  "a  cable  with 
strong  coils,  a  trumpet  of  brass,  crashing  through  the  air 
with  two  or  three  sharp  notes,  such  is  Hebrew,  A  language 
of  this  kmd  is  not  adapted  to  the  expression  of  philosophic 
thought,  or  scientific  result,  or  doubt,  or  the  sentiment  of  the  infinite. 
The  letters  of  its  books  are  not  to  be  many;  but  they  are  to  be  letters  of 
fire."  This  is  the  tongue  in  which  is  written  the  words  of  the  One  God 
of  Abraham.  Speaking  of  Greece,  Renan  says,^  "Her  philosophers, 
while  dreaming  of  the  immortality  of  the  soul,  were  tolerant  toward 
the  iniquities  of  the  world.  Her  religions  were  merely  elegant  munic- 
ipal playthings;  the  idea  of  a  universal  religion  never  occurred  to 
her.  The  ardent  genius  of  a  small  tribe  established  in  an  outlandish 
comer  of  Syria  seemed  created  to  supply  this  void  in  the  Hellenic  intel- 
lect. .  .  .  The  inhabitants  of  Padan-Aram  were  particularly  attached 
to  the  legend  of  the  fabled  Orham,  King  of  Ur,  and  called  him  Aborham 
(Abraham),  the  Father-Orham,  a  name  which  was  destined  to  go  down 
into  the  deepest  strata  of  mythological  history.^     .     .     . 

"A  sort  of  deism  without  metaphysics  was  what  the  fathers  of  Judaism 
and  Islamism  inaugurated  at  that  early  period,  with  a  very  sure  and 
unerring  instinct"*.  .  .  .  These  ancient  patriarchs  of  the  Syrian 
deserts  were  in  reality  comer-stones  of  humanity.  They  are  the  '  tris- 
megists'  of  religious  history.  Judaism,  Christianity,  and  Islamism  all 
proceed  from  them."^ 

The  god  of  Abraham  is  a  transcendently  powerful  and  personal 
conception :  "I  am  the  first,  and  I  am  the  last ;  and  beside  me  there  is  no 
God."^  "I  am  the  Lord,  and  there  is  none  else;  beside  me  there  is  no 
God:  I  will  gird  thee,  though  thou  hast  not  known  me:  that  they  may 
know  from  the  rising  of  the  sun,  and  from  the  west  that  there  is  none 

»  Uislory  of  the  People  of  Israel,  Vol.  I.,  p.  86. 

'  Ibid.,  Preface,  p.  vii.  viii. 

>  Ibid.,  p.  63. 

*  Ibid.,  p.  49. 

'  Ibid.,  p.  SI. 

'  Isaiah,  LK:6. 

387 


388  Religion  Pt.  IV 

beside  me:  I  am  the  Lord,  and  there  is  none  else.  I  form  the  light  and 
create  darkness;  I  make  peace,  and  create  evil;  I  am  the  Lord,  that  doeth 
all  these  things."^  "I  have  made  the  earth,  and  created  man  upon  it: 
I,  even  my  hands,  have  stretched  out  the  heavens,  and  all  their  host  have 
I  commanded. "2  These  words  sound  not  imlike  the  god  of  Zoroaster, 
of  Lao-tsze,  of  Egypt,  and  the  Upanishads,  speaking  in  the  first  person. 

It  is  a  singular  fact  that  this  transcendently  spiritualized  and  personal- 
ized religion  dwells  but  slightly  upon  the  subject  of  immortality.  "The 
silence  of  the  Pentateuch  respecting  immortality,"  says  Clarke,^  "is 
one  of  the  most  remarkable  features  of  the  Jewish  religion." 

With  reference  to  ethics  is  written:*  "Thou  shalt  love  thy  neigh- 
bour as  thyself :  I  am  the  Lord."  Again  :^  "And  if  a  stranger  sojourn 
with  thee  in  your  land,  ye  shall  not  do  him  wrong.  The  stranger  that 
sojourneth  with  you  shall  be  unto  you  as  the  homebom  among  you,  and 
thou  shalt  love  him  as  thyself."  It  seems  safe  to  say  that  no  creed  ever 
has,  or  ever  wall,  transcend  this  clear  injunction  of  the  God  of  the  Hebrew 
prophets;  it  is  identical  with  the  best  of  the  noblest  creeds  of  the  world. 

Perhaps  the  creed  of  Israel  could  not  be  better  summarized  than  in 
the  words  of  her  own  prince  of  thinkers:^  "Remember  thy  Creator 
in  the  days  of  thy  youth,  or  ever  the  evil  days  come,  and  the  years  draw 
nigh,  when  thou  shalt  say,  I  have  no  pleasure  in  them  ...  or  ever 
the  silver  cord  be  loosed,  or  the  golden  bowl  be  broken  .  .  .  and 
the  dust  return  to  the  earth  as  it  was,  and  the  spirit  return  unto  God 
who  gave  it.  .  .  .  This  is  the  end  of  the  matter;  all  that  hath  been 
heard:  fear  God  and  keep  his  commandments;  for  this  is  the  whole  duty 
of  man." 

Here  is  an  omnipotent,  self-conscious  Divinitycommunicating  with  man 
through  his  chosen  prophets  with  "the  word  of  the  Lord  upon  them." 
Here  is  an  ethical  system  identical  with  the  best  of  all  other  creeds, 
and  immortality  subordinated  to  other  thought  or  conceived  in  the 
words  of  the  Preacher  as  the  "return  of  the  spirit  to  God  who  gave  it." 


I  Isaiah,  LXV.-s- 

i  Isaiah,  LXV:i2. 

«  The  Ten  Great  Religions.Wol  7,  p.  417. 

*  Leviticus,  XIX:  18. 

*  Leviticus,  XIX:33. 

*  Ecciesiastes,  XII.  i,  6,  13, 


CHAPTER  XI 

MOHAMMED 

IN  THE  name  of  the  merciful  and  compassionate  God. 
"r.  H.  We  have  not  sent  down  this  Qur'in,  to  thee  that 
thou  shouldst  be  wretched;  only  as  a  reminder  to  him  who 
fears  —  descending  from  Him  who  created  the  earth  and  the 
high  heavens,  the  Merciful  settled  on  the  throne!  His  are  what  is  in 
the  heavens,  and  what  is  in  the  earth,  and  what  is  betv/een  the  two 
and  what  is  beneath  the  ground!  .  .  .  God,  there  is  no  God  but  He! 
His  are  the  excellent  names."  ^ 

"He  is  God,  there  is  no  God  but  He;  to  Him  belongs  praise,  in  the 
first  and  the  last;  and  His  is  the  judgment;  and  unto  Him  shall  ye 
return.  "2 

"He  is  God,  the  one,  the  victorious.  He  created  the  heavens  and  the 
earth  in  truth!  It  is  He  who  clothes  the  day  with  night;  and  clothes  the 
night  with  day;  and  subjects  the  sim  and  the  moon,  each  one  runs  on  to 
an  appointed  time;  aye!  He  is  the  mighty,  the  forgiving!  .  .  .  His 
is  the  Kingdom,  there  is  no  God  but  He.^     .     .     . 

"He  is  God  alone!  God  the  Eternal!  He  begets  not  and  is  not 
begotten!  Nor  is  there  like  unto  Him  any  one! "^  "Your  God  is  one 
God;  there  is  no  God  but  He,  the  merciful,  the  compassionate."^ 

This  is  the  God  of  Islam,  the  God  of  Mohammed.  When  the  writings 
and  the  creeds  of  the  chief  religious  teachers  of  the  world  are  examined 
the  God  of  Mohammed  becomes  a  by  no  means  unfamiliar  conception, 
a  by  no  means  isolated  creation  of  the  Prophet.  The  God  of  Islam 
presents  the  attributes  of  the  supreme  Divinity  of  the  other  great  re- 
ligions of  the  world.  When  the  human  being  invokes  the  Divinity, 
the  results  are  practically  always  identical:  he  exhausts  the  resources  of 
his  imagination;  his  capacity  for  exalted  utterance  and  the  superlatives 
of  his  language.     This  done,  he  can  but  repeat  himself  or  the  conceptions 

»  Qur'in,  Chapter  of  T.  H.  (XX.,  Mecca)  Translation,  by  E.  H.  Palmer,  Sacred  Books  of  the  East,  Vol. 
IX.,  pp.  34-35- 

'  Ibid.,  xxviii.,  70,  p.  115. 

•  Ibid.,  xxxix.,  5.  p.  182. 
I  *  Ibid.,  cxii.,  p.  344. 

» Ibid.,  Vol.  VI.,  Part  I.,  ii.,  150.  p.  22. 

389 


390  Religion  Pt.  IV 

of  other  seers  and  prophets,  and  a  study  of  the  bulk  of  the  religious  writ- 
ings of  the  world  shows  that  neither  one  nor  the  other  opportunity  has 
been  neglected.  A  comparison  of  the  more  elevated  records  of  Egypt; 
the  writings  of  the  Vedas,  many  Chinese  inspirations,  the  religious 
material  of  the  Achaemenian  inscriptions,  the  utterances  of  the  Hebrew 
prophets,  the  suras  of  the  Alkoran  and  many  prayers  and  invocations 
of  the  Greek  and  Roman  world,  leaves  a  singularly  uniform  impression 
with  reference  to  the  Divinity  described.  The  God  invoked  in  the 
best  of  these  writings  never  varies:  whatever  differences  may  be  found 
are  traceable  to  superficial  distinctions  of  time,  race  or  figurative  lan- 
guage. The  God  Himself  remains  always  the  same  God.  He  represents 
the  most  transcendent  conceptions  to  which  a  given  mind,  race  or  tongue 
can  give  birth;  the  highest  of  the  highest,  the  superlative  of  superlatives 
and  —  the  hymn  or  invocation  ceases,  or  begins  to  repeat  itself. 

Thus,  the  God  upon  whom  Mohammed  dwells  at  length,  bears  a  close 
resemblance  to  the  God  whom  Lao-tsze  knew  it  was  useless  to  attempt 
to  describe.  If  this  God  is  studied  more  closely,  familiar  echoes  of 
Zoroaster  occur,  of  the  Book  of  the  Dead,  of  the  Upanishads,  the  Vedas,  the 
Achsemenian  inscriptions,  the  Hebrew  prophets,  and  of  the  best  of  the 
religious  thought  of  Greece  and  Rome.  In  all  this  body  of  material, 
the  noblest  conceptions  with  reference  to  the  Divinity  are  constantly 
going  over  the  same  ground  in  different  tongues  and  different  climes; 
the  Supreme  God  has  a  different  name  —  there  is  no  other  distinction. 
If  there  is  one  Supreme  God,  there  can  be  but  one  God  who  is  Supreme, 
and  whether  sung  on  the  rivers  of  China,  the  snow-clad  crests  of  the 
Himalayas,  the  plains  of  old  Iran,  or  the  deserts  of  Arabia,  He  must 
always  remain  One  and  the  Same. 

With  reference  to  immortality  the  great  soulrces  of  religions  inspiration 
are  often  vague  or  silent;  it  is  only  in  descending  to  their  interpreters 
and  expounders  that  the  details  of  a  future  life  begin  to  appear.  Moham- 
med presents  a  marked  exception;  in  no  single  fountain-head  of  religious 
inspiration  may  such  explicit  conceptions  of  life  after  death  be  found. 
In  the  opinion  of  Mohammed,  the  future  state  of  the  sinner  and  unbe- 
liever present  no  alluring  prospects. 

"Verily,  those  who  disbelieve  in  our  signs,  we  will  broil  them  with 
fire;  whenever  their  skins  are  well  done,  then  we  wiU  change  them  for 
other  skins,  that  they  may  taste  the  torment.  Verily,  God  is  glorious, 
and  wise."^ 


»  S,  B.  E.,  Vol.  VI..  Qur'an.  Part  I.,  iv„  55.  p.  80. 


Bk.  Ill  Mohammed  391 

"And  for  those  who  disbelieve  in  their  Lord  is  the  torment  of  hell, 
and  an  evil  journey  shall  it  be!"^ 

"Verily,  hell  is  an  ambuscade;  a  reward  for  the  outrageous,  to  tarry 
therein  for  ages.  They  shall  not  taste  therein  cool  nor  drink,  but  only 
boiling  water  and  pus  —  a  fit  reward! "^ 

They  shall  "dwell  in  the  fire  for  aye,"  and  shall  be  "given  to  drink 
boiling  water  that  shall  rend  their  bowels  asunder."  ^ 

On  the  other  hand,  the  Koran  glitters  with  equally  accurately  formu- 
lated conceptions  of  Paradise,  the  eternal  abode  of  the  good  and  the 
faithful;  conceptions  possessing  an  interesting  psychological  relation  to  the 
arid  wastes  of  Arabia,  for  "beneath  it  rivers  flow,  its  food  is  enduring  and 
likewise  its  shade!"* 

"In  it  are  rivers  of  water  without  corruption,  and  rivers  of  milk,  the 
taste  whereof  changes  not,  and  rivers  of  wine  delicious  to  those  who 
drink;  and  rivers  of  honey  clarified;  and  there  shall  they  have  all  kinds 
of  fruit  and  forgiveness  from  their  Lord."^  There  the  faithful  will 
find  "garden  twain,"  "both  furnished  with  branching  trees,"  "in  each 
are  flowing  springs,"  "in  each  are  of  every  fruit  two  kinds"  and  couches 
the  "linings  of  which  are  of  brocade,"  with  "the  fruit  of  the  two  gar- 
dens within  reach,  to  cull."  "Therein  are  maids  of  modest  glances," 
of  the  greatest  discretion  and  reserve;  like  "rubies  and  pearls";  the 
gardens  are  ^shaded  "with  dark  green  foliage";  "in  each  two  gushing 
springs,"  in  each  "fruit  and  palms  and  pomegranates";  "maidens  best 
and  fairest,  with  bright  large  eyes,"  "kept  in  their  tents,"  reclining 
on  "beautiful  carpets"  and  "green  cushions."^ 

There  are  other  passages  in  the  Koran  however,  presenting  different 
and  not  less  elevated  conception  of  man's  immortal  nature;  "God 
takes  to  Himself  souls  at  the  time  of  their  death. "'^  Sale  translates^ 
a  verse  in  the  Chapter  on  Light:  "Unto  God  belongeth  the  kingdom  of 
heaven  and  earth;  and  unto  God  shall  be  the  return  at  the  last  day." 
Lane-Poole^  renders  the  same  lines:  "God's  is  the  empire  of  the 
heavens  and  the  earth,  and  to  Him  must  all  things  return."     "This 


>  Ibid.,  Vol.  IX,  Part  II.,  Ixvii..  5,  p.  293. 

2  Ibid.,  kxviii.,  2S,  p.  317. 

'  Ibid.,  xlvii.,  is,  p.  230. 

*  Ibid.,  Vol.,  VI.,  xiii.,  35,  p.  237. 

'  Ibid.,  Vol.  rX.,  xlvii.,  15,  p.  230. 

'  Ibid.,  Iv.,  4y7S,  p.  260. 

'  Ibid.,  ch.  xxxix.,  40,  p.  186. 

'  Koran,  xxv.,  p.  285. 

'  The  Speeches  of  Mohammed,  p.  Hi. 


392  Religion  Pt.  IV 

formula,'"  says  Palmer, ^  "is  always  used  by  Mohammedans  in  any 
danger  and  sudden  calamity,  especially  in  the  presence  of  death." 
Here  is  a  conception  of  immortality  identical  with  that  of  Lao-tsze, 
the  Book  of  the  Dead,  the  Upanishads,  and  the  author  of  Ecclesiastes: 
the  union  of  man  with  God. 

There  is  frequent  evidence  in  the  Koran  of  Mohammed  having  con- 
sidered himself  a  divinely  appointed  and  inspired  messenger. ^ 

With  reference  to  Mohammed's  ethical  conceptions  the  following 
passages  may  be  cited:  "Righteousness  is  not  that  ye  turn  your  faces 
toward  the  east  or  the  west,  but  righteousness  is,  one  who  believes  in 
God,  and  the  last  day,  and  the  angels,  and  the  Book,  and  the  prophets, 
and  who  giveth  wealth  for  His  love  to  kindred,  and  orphans,  and  the 
poor,  and  the  son  of  the  road  (the  wayfarer),  and  beggars,  and  those 
in  captivity;  and  who  is  steadfast  in  prayer,  and  gives  alms;  and  those 
who  are  sure  of  their  covenant  when  they  make  a  covenant;  and  the 
patient  in  poverty,  and  distress,  and  in  time  of  violence;  those  are  they 
who  are  true,  and  these  are  those  who  fear."^  The  following  passages 
occur  in  the  table  talk  of  Mohammed r^  "Say  not,  if  people  do  good 
to  us,  we  will  do  good  to  them,  and  if  people  oppress  us,  we  will  oppress 
them;  but  resolve  that  if  people  do  good  to  you,  you  will  do  good  to  them, 
and  if  they  oppress  you,  oppress  them  not  again,"  "Forgive  thy 
servant  seventy  times  a  day."^  "He  is  not  strong,  or  powerful  who 
throws  people  down,  but  he  is  strong  who  withholds  himself  from  anger. "^ 
In  the  Koran^  is  written  that  paradise  shall  be  the  reward  of  those  who 
"ward  off  evil  with  good." 

In  the  creed  of  Islam  is  met  the  same  omnipotent  Divinity  of  other 
religious  sources;  an  inspired  prophet  who  presents  various  conceptions 
of  immortality,  permitting  various  interpretations,  one  of  which  is 
man's  union  with  God  after  death,  the  fundamental  conception  of  all 
the  great  creeds  of  the  world.  Ethical  injunctions  may  be  selected  from 
the  words  of  Mohammed  which  almost  parallel  those  of  other  great 
religions. 

>  Sacred  Books  of  the  East,  Vol.  VI.,  p.  22.     Note. 
'  Cf.  Ibid.,  11.,  and  note  p.  13. 

•  Ibid.,   ii.,  170,  p.  24. 

•  The  Speeches  of  Mohammed,  p.  147. 
'  Ibid.,  p.  163. 

•  Ibid.,  p.  167. 

»  S.  B.  E.,  VoL  VI.,  xiii,  20,  p.  335- 


CHAPTER  X 

GREECE 

Section    I  —  Introduction.  Section    II  —  Greek    Tragedy. 

Section     III  —  Greek     Philosophy. 


Section  I  —  Introduction 

EACH  of  the  creeds  already  examined  possess  one  body  of 
writings  as  the  chief  source  of  information.  In  Greece  and 
Rome,  however,  no  such  recognized  sources  are  found,  and 
inquiry  into  the  best  religious  thought  of  those  countries 
must  adopt  a  modified  method.  The  political  and  religious  history  of 
the  two  great  Western  nations  of  antiquity,  suggests  that  the  best  of 
their  religious  opinion  should  besought  anyhwere  rather  than  in  ''in- 
spired" channels. 

The  primitive  belief  of  the  Aryans,  whatever  it  may  have  been,  un- 
doubtedly changed  with  the  wars  and  wanderings  of  the  tribes,  as  they 
emerged  from  the  mists  of  the  past.  The  earliest  poets  and  theogonists 
of  Greece  doubtless  found  a  mass  of  myth  and  legend  awaiting  them, 
and  information  with  reference  to  these  is  almost  entirely  derived  from 
Orpheus,  Homer  and  Hesiod.  These  are  the  sources  to  which  the 
earlier  popular  creeds  of  Hellas  must  be  referred,  and  their  informa- 
tion is  elusive. 

The  following  instance  suggests  the  results  to  which  inquiry  in  this 
field  may  lead.  Justin,^  in  his  Hortatory  Address  to  the  Greeks,  says 
that  Orpheus  was  their  first  teacher  of  polytheism .  Again ,  ^  that  Orpheus 
introduces  no  less  than  three  hundred  and  sixty  gods  in  his  theogony. 
He  then  proceeds  to  cite  later  Orphic  writings  in  support  of  a  purely 
monotheistic  creed. 

Early  theological  polemics  present  other  instances  of  the  same  kind. 
If  the  Orphic  fragments  themselves  are  analyzed,  little  light  is  thrown 
upon  the  subject. 


»xv. 

*  Justin  on  the  Sole  Government  of  God,  II. 


393 


394  Religion  Pt.  IV 

The  hymns  of  Orpheus,  the  speculations,  of  Pythagoras,  and  the 
Platonic  writings  were  adopted  by  the  Alexandrian  mystics  as  the 
chief  sources  of  their  inspiration.  The  speculations  of  Plotinus,  Porphyry, 
and  Proclus  suggest  the  mazes  through  which  the  Orphic  fragments  may 
be  followed. 

Recent  inquiry,  however,  refers  the  bulk  of  the  Orphic  writings  to  the 
Alexandrine  age,  and  in  the  words  of  Grote:^  "  Even  the  earliest  among 
them,  which  served  as  the  stock  on  which  the  later  editions  were  en- 
grafted, belong  to  a  period  far  more  recent  than  Hesiod:  probably  to 
the  century  proceeding  Onomakritus  (B.  C.  610-510)." 

If,  on  the  other  hand,  the  most  ancient  of  these  texts  are  ac- 
cepted for  what  they  purport  to  be,  they  present  a  fragmentary 
mass  of  poetic  imagery  and  no  systematic  thought  permitting  ac- 
curate analysis. 

So  far  as  Homer  is  concerned  there  is  no  cosmological,  theological 
or  teleological  hypothesis  for  or  against  which  a  brave  array  of  passages 
from  the  Iliad  or  Odyssey  might  not  be  cited.  In  the  light  of  the  con- 
flicting and  inconsequent  thought  of  the  greatest  of  the  bards,  even  the 
skeptics  of  a  later  age  claimed  him  for  their  own.^  As  the  learned 
Mosheim^  says:  "The  poet  seems  to  me  to  have  been  at  no  certainty, 
but  to  have  rashly,  and  with  but  little  judgment,  interwoven  with  his 
verses  the  dogmas  that  were  prevalent  among  the  Greeks,  I  do  not 
therefore  wonder  that  the  ancients,  Heraclides,  Plutarch,  and  in  fact 
all,  whether  wise  or  unwise,  were  able  to  corroborate  as  they  pleased 
their  opinions  and  dogmas  by  the  authority  of  Homer."  Consistent 
thought  is  not  the  chief  characteristic  of  the  earlier  cosmological  theog- 
onists;  and  where  thought  is  not  consistent,  analysis  is  impossible. 
Nor  is  inquiry  aided  by  a  study  of  the  Sibylline  oracles.  If  regarded 
as  genuine,  they  may  be  used  for  any  purpose;  if  regarded  as 
partly  or  entirely  the  fabrications  of  Alexandrine  mystic,  Jew  or 
Christian,  they  become  valueless  as  casting  any  light  upon  pure 
Hellenic  thought.  Thus  the  attempt  to  submit  the  earlier  poets, 
theogonists,  and  oracles  to  a  critical  analysis  results  in  the  impres- 
sion of  having  tried  to  analyze  a  cloud,  which,  with  a  little  sym- 
bolic jand  allegorical  intrepretation,  may  be  presented  in  any  form 
desired.     These  and  allied  sources  do  not  contain  the  best  religious 


'  Bislory  of  Greece,  Vol.  I.,  p.  20. 

'  Cf.  Laertius,  Pynho,  VIII. 

'  Cudworth's  Intellectual  System  (Harrison),  Vol.  I.,  p.  172  (note). 


Bk.  Ill  Greece  395 

inspiration  of  Hellas;  on  the  contrary  they  present  a  heterogeneous 
mass  of  myth,  legend,  imagery  and  forgery  suggesting  at  times  the 
inspiration  of  Jew  and  Christian,  priest  and  politician,  quite  as 
much  as  that  of  the  Di\inity. 

Orpheus,  Homer,  and  Hesiod,  therefore,  together  with  the  entire 
body  of  oracles,  sibyls,  dogmas,  legends,  and  allegories  of  the  popular 
theology  are  not  embraced  in  the  field  examined.  Attention  is  here 
turned  to  the  records  of  the  ablest  minds  of  Hellas  in  her  prime. 

Greek  history  presents  two  periods:  Marathon,  Salamis,  and  the 
Victories  of  Gelon  inaugurate  the  second  period;  and,  with  the  exception 
of  Sparta  perhaps,  Hellenic  civilization  about  the  fifth  century,  B.  C, 
undergoes  a  change  not  unUke  that  of  the  Renaissance  in  later  Europe. 
Old  beliefs  receive  new  formulation,  are  subjected  to  analysis  and  criti- 
cism or  rejected.  New  social  forms  are  developed,  new  forms  of  thought 
evolved,  and  the  most  gifted  of  the  races  of  men  bursts  into  matur- 
ity. This  second  period  embraces  the  best  of  the  religious  life  of 
Greece. 

Mature  Hellenic  civilization  presents  two  more  or  less  distinct 
divisions  of  thought:  Greek  tragedy  and  Greek  philosophy.  These  lead 
to  another  bewildering  impression  of  variety  and  contradiction.  There 
is,  apparently,  no  attitude  toward  the  Divinity  and  the  Universe,  God, 
Nature,  and  Man  not  contained  in  the  thought  of  Greece  in  the  clearest 
and  most  beautiful  of  forms.  There  is  scarcely  a  phase  of  religious  hallu- 
cination and  fanaticism,  of  the  purest  atheistic  materialism,  skeptical 
idealism  or  the  sanest  worship  of  one  omnipotent  Creator  not  expressed 
in  the  tongue  of  ancient  Hellas. 

If  this  body  of  literature  is  sifted,  in  order  to  reach  its  fountain-heads, 
the  three  great  tragic  poets  are  met  on  one  side,  and  her  leaders  of 
philosophic  thought,  from  Thales  to  Pyrrho,  on  another.  Here  again, 
however,  the  same  diflaculty  occurs,  owing  to  the  wealth  and  variety 
of  the  material.  In  the  later  phases  of  Greek  tragedy,  there  is  much 
thought  which  may  be  regarded  as  either  skeptical  or  atheistic; 
while  in  Greek  philosophy,  the  purest  theism  and  the  purest 
atheism  are  found  hand  in  hand,  so  to  speak,  or  at  least  existing  side 
by  side. 

Religious  ideas  are  obviously  not  to  be  sought  in  the  rationliastic  or 
scientific  speculation  of  poet  or  philosopher.  The  fields  of  religion  and 
philosophy  may  therefore  be  regarded  as  distinct;  the  essentially  re- 
ligious views  of  the  philosophers  may  be  grouped  \\ith  those  of  the  tragic 


396  Religion  Pt.  IV 

writers;  and  rationalistic  and  scientific  inquiry  reserved  for  separate 
study. 

Section  II — Greek  Tra.gedy 

The  three  great  tragic  poets  stand  at  the  sources  of  the  religious 
thought  of  Hellas  at  her  zenith.  It  is  impossible  to  study  them  in  this 
connexion  without  discovering  a  consistent  conception  of  divine  unity 
and  power.  The  religious  significance  of  Greek  tragedy  will  appear  to 
some  minds  vastly  more  inspiring  than  that  of  many  writings  of  an 
exclusively  religious  nature. 

Greek  tragedy  reveals  as  consistent  conceptions  of  divine  omnipotence, 
justice,  intelligence,  and  unity  of  man's  immortal  nature;  and  as  elevated 
a  moral  interpretation  of  that  nature  as  the  bulk  of  the  sacred  writings 
of  the  world. 

*'If  we  proceed  to  analyze  the  cardinal  idea  of  Greek  tragedy"^ 
says  an  informed  student,  "we  shall  again  observe  the  close  connection 
which  exists  between  the  drama  and  the  circumstances  of  the  people  at 
the  time  of  its  production.  Schlegel,  in  his  Lectures  on  the  Drama, 
defines  the  prevailing  idea  of  Greek  tragedy  to  be  the  sense  of  an  op- 
pressive destiny  —  a  fate  against  which  the  will  of  man  blindly  and  vainly 
dashes.  This  conception  of  hereditary  destiny  seems  to  be  strongly 
illustrated  by  many  plays,  Orestes,  (Edipus,  Antigone  are  unable  to 
escape  their  doom.  Beautiful  human  heroism  and  exquisite  innocence  are 
alike  sacrificed  to  the  fatality  attending  an  accursed  house.  Yet  Schlegel 
has  not  gone  far  enough  in  his  analysis.  He  has  not  seen  that  this 
inflexible  fate  is  set  in  motion  by  a  superior  and  anterior  power,  that  it 
operates  in  the  service  of  offended  justice.  When  (Edipus  slays  his 
father,  he  does  so  in  contempt  of  oracular  warnings.  Orestes,  haunted 
by  the  Furies,  has  a  mother's  blood  upon  his  hands,  and  unexpiated 
crimes  of  father  and  of  grandsire  to  atone  for.  Antigone,  the  best  of 
daughters  and  most  loving  of  sisters,  dies  miserably,  not  dogged  by 
Fate,  but  having  of  her  own  free  will  exposed  her  life  in  obedience  to  the 
pure  laws  of  the  heart.  It  is  impossible  to  suppose  that  a  Greek  would 
have  been  satisfied  with  the  bald  fate-theory  of  Schlegel.  Not  Fate 
but  Nemesis,  was  the  ruling  notion  in  Greek  tragedy.  A  profound  sense 
of  the  Divine  government  of  the  world,  of  a  righteous  power  punishing 
pride  and  vice,  pursuing  the  children  of  the  guilty  to  the  tenth  generation, 
but  showing  mercy  to  the  contrite  —  in  short,  a  mysterious  and  almost 

•  John  Addington  Symonds,  The  Creek  Poets,  Vol.  II.,  p.  7. 


Bk.  Ill  Greece  397 

Jewish  ideal  of  offended  Holiness  pervades  the  whole  work  of  the 
tragedians.  This  religious  conception  had  gradually  defined  itself  in 
the  consciousness  of  the  Greek  race."  Such  is  the  impression  of  a 
study  of  the  tragic  writers :  one  of  the  most  intense  and  convincing  concep- 
tions of  divine  unity  and  power  to  which  human  utterance  has  given  ex- 
pression. The  God  of  ^schylus  and  Sophocles  yields  in  nothing  in  majesty 
or  might,  in  dignity  or  justice,  to  any  God  of  which  the  mind  of  man  has 
dreamed;  yields  to  nothing  to  the  God  of  Zoroaster  or  Mohammed,  to 
the  Brahman  of  the  Upanishads,  to  the  Supreme  Being  of  Lao-tsze,  of 
Egypt,  or  to  the  Jehovah  of  the  Hebrew  prophets.     Says  ^Eschylus:^ 

"Great  King  of  Kings,  most  blessed  of  the  blest, 
Most  perfect  Might  of  power's  last  degree; 
Thrice  happy  Zeus,  but  let  persuasion  rest 

Upon  thy  will,  that  what  Thou  will'st  may  be." 


Again  :2 


"For  'neath  no  other's  sway  hast  thou  Thy  throne, 
To  wield  a  sceptre  as  another  wills; 
No  high  command  hast  thou  to  hold  in  awe, 
But  ever,  ready  as  Thy  Word,  the  deed 
Awaits  to  hasten  what  Thy  mind  conceives." 

And  Euripides  :3 

"Ah,  Zeus,  why  should  we  wretched  mortals  tell 
The  wisdom  of  the  sons  of  men  —  in  vain, 
For  but  in  Thee  must  we  forever  dwell, 
And  all  we  do  but  what  thou  dost  ordain." 

Sophocles  closes  the  tragedy  of  the  Trachinia  with  words  which 
might  be  approximately  rendered: 

"Ye  who  dread  death  have  seen^  and  many  woes  and  strange, 
Ma^  know  that  Zeus  alone  is  found  within  them  all." 

As  conceived  in  the  thought  of  ^schylus,  God's  power,  justice,  man's 
immortality  and  the  retribution  for  sin,  differ  in  no  essential  particular 
from  the  allied  ideas  of  any  of  the  great  creeds  of  the  world: 

"Look  up  to  Plim  who  watches  from  on  high 
And  guards  the  toiling  sons  of  men,  and  those 
Who  justice  from  their  feUows  seek  in  vain : 
The  wrath  of  God  of  suppliant  abides, 
Nor  by  the  guilty's  woes  is  soon  appeased."  * 


» Sup.  503. 

*  Sup.  S74. 

'  Sup.  734. 

•  Sup.  3S6. 


398 


Religion 

"How  then  shall  I  behold  the  thought  Divine, 
Or  pierce  the  depths  of  its  unfathomed  range?  "  * 

"Whate'er  is  destined,  that  must  even  be; 
Nor  e'er  transgressed  the  boundless  will  of  God."  ' 

"For  mighty  Pluto  judges  men  below. 
And  aU  surveys  with  aU  recording  mind."  ' 

"Yet  courage  still,  in  proper  time  and  day, 
Each  man  who  shghts  the  gods  strict  justice  finds."  * 


Pt.  IV 


In  the  thought  of  Sophocles  is  found  the  same  God  and  the  same 
ideas.  Creon,  King  of  Thebes,  has  commanded  that  the  body  of  Antig- 
one's brother  remain  unburied,  exposed  to  the  wolves  and  vultures. 
Antigone  buries  the  body  herself,  despite  his  orders,  and  says,^  when 
questioned: 

"Not  Zeus  it  was  who  sent  me  that  command, 
Nor  such  the  justice  which  the  gods  enthroned, 
Have  fixed  within  the  laws  for  man  designed; 
Nor  of  such  force  have  I  thine  edict  deemed, 
That  God's  unwritten  and  unfailing  laws 
By  mortal  man  could  ever  be  annulled. 
Not  of  to-day  are  these,  nor  yesterday; 
Their  life  e'er  flows  eternal  on  through  time. 
And  no  one  knows  when  first  they  saw  the  light. 
Could  I,  of  some  mere  mortal  pride  in  dread. 
E'er  answer  to  the  Gods  for  breaking  these?  " 


Again: 


"Ah!  may  the  fates  my  life  forever  guide, 
In  purest  rev'rence  of  each  deed  and  word. 
Ordained  by  those  decrees  of  Heaven  sublime, 
Whose  father  great  Olympus  was  alone. 
No  mortal  form  within  their  nature  blends, 
Nor  these  to  sleep  shall  e'er  obhvion  lull; 
For  great  the  might  of  God  that  hves  therein, 
And  great  the  God,  nor  grows  He  ever  old. 


1  Sup.   I02S. 

'  Sup.  1015. 

•  Eumenides,  272. 

•  Sup.  711. 

'  Antigone,  450. 

•  (Edipus  Tyrannus,  864. 


Bk.  Ill  Greece  399 

"Nay,  by  the  flash  of  mighty  Zeus 
And  Themis  crowned  in  heaven, 
Not  long  shall  sin  be  unavenged."  ' 

The  measure  of  Euripides  contains  a  singularly  interesting  body  of 
religious  thought.  He  presents  the  disintegration  of  old  Hellenic  forms, 
.^schylus  and  Sophocles  transcend  the  conventional  theogonies  and  relig- 
ious conceptions  and  weld  these  into  a  unity  —  Euripides  on  the  other 
hand  examines,  analyzes  or  attacks  them.  Euripides  thus  presents  a  spirit 
of  inquiry  and  skepticism  not  found  in  the  works  of  the  older  tragedians. 
Many  passages  might  be  cited  illustrating  disbelief  in  the  "gods,"  and 
the  opinion  that  they  owed  even  their  imaginary  existence  to  earthly 
interests  of  priest  and  politician.  If  the  attention  is  limited,  to  these 
and  allied  passages,  Euripides  seems  an  irreligious  or  non-religious 
writer.  No  such  impression,  however,  is  found  in  the  writings  of  Eurip- 
ides in  their  entirety.  On  the  contrary,  passages  occur  presenting 
religious  conceptions  identical  -with  those  of  ^schylus  and  Sophocles; 
and  it  is  obviously  these  which  present  the  religious  thought  of  this 
interesting  mind  as  distinguished  from  skeptical  and  philosophical 
speculation.     The  following  may  suggest  the  passages  cited: 

Oh,  thou.  Upholder  of  the  earth,  and  yet 
Thereon  in  sphinx-like  mystery  enthroned; 
Whate'er  thou  art,  or  mighty  Zeus,  or  Fate 
In  nature's  law  ordained,  or  guiding  Mind, 
Thee  I  invoke;  for  though  thou  mak'st  thy  way 
With  noiseless  tread  through  hidden  paths  unseen, 
With  justice  rulest  thou  the  sons  of  men." 

Who  knows  but  what  we  live  in  Death's  dull  bond; 
And  dying,  enter  into  life  beyond?' 

Far  better  than  a  host,  without  the  right, 
Is  one  good  man  in  God's  and  Justice's  sight.* 

Through  all  the  sky  the  fearless  eagle  soars. 
And  all  the  earth's  the  brave  man's  native  land." 

There  is  no  shadow  'mong'st  the  sons  of  men. 

No  darksome  cave  of  earth,  whose  depths  can  heal 

The  evil  tainted  heart,  though  ne'er  so  wise.' 


1  Electra,  1063. 

"  Trojan  Women,  884. 

'  Dindorf,  Vol.  II.,  Frag.,  7,  p.  936. 

*  Ibid.,  Frag,  s,  p.  92g. 
'  Ibid.,  Frag.  19,  p.  975 

•  Ibid.,  Frag.  3.  p.  932. 


400  Religion  Pt.  IV 

Wild  tongues  and  folly's  brood 

End  but  in  pain, 
Sweet  peace  and  fortitude 

Steadfast  remain. 
For,  in  the  ether  free. 

Far  though  they  dwell, 
Heaven-born  powers  see 

Mortals  full  well.' 

"Treat  not  the  wretched  ill;  thou  art  a  man.'" 

Analogous  passages  might  be  multiplied.  The  foregoing  present 
grounds,  however,  for  the  opinion  that  Greek  tragedy  contains 
identically  the  same  conception  of  one,  omnipotent  Divinity,  as  the 
bulk  of  the  religions  of  the  world;  belief  in  man's  immortal  nature 
and  an  elevated  conception  of  ethics  and  morality.  The  exquisite 
words  of  Sophocles^  typify  the  ethics  of  Greek  tragedy: 
Xccpiq  xdgi-^  yap  ^aTiv  ^  TixToua'  ae(. 

Section  III  —  Greek  Philosophy 
Article  i — The  Early  Philosophers. 

"All  things  are  full  of  gods,"  Thales  is  quoted'*  as  saying.  "With 
reference  to  the  gods,"  says  Protagoras,^  "I  am  unable  to  say  anything 
definite,  either  in  connexion  with  their  existence,  or  their  non-existence." 
No  gods  exist  at  all,  Democritus^  implies,  when  he  says:  "Nothing 
exists  but  atoms  and  the  void." 

Such  varied  opinions  suggest  a  question  with  reference  to  the  best 
means  of  reviewing  that  portion  of  Hellenic  philosophic  thought  devoted 
to  religion ;  as  much  of  Greek  philosophy  is  evidently  either  non-religious 
or  directly  antagonistic  to  religion. 

The  simplest  method  seems  to  be  to  separate  the  field  into  purely 
philosophic  and  purely  religious  speculation;  to  reserve  the  former  for 
later  study;  and,  while  glancing  at  the  more  or  less  unsystematic  theol- 


>  BacchcB,  385. 

'  Dindorf,  Frag.  15.  P-  901. 

»  Ajax,  $22.     Untranslatable;  the  meaning  might  be  suggested: 
For  kindly  grace  shall  e'er  beget 
More  grace  and  kindness  still. 

•  Laertius,  I.  i,  p.  6. 
»  Ibid.,  IX.  8,  p.  239. 

•  Ibid.,  IX.  7,  p.  238. 


Bk.  Ill  Greece  401 

ogizing  of  the  earlier  thinkers,  to  concentrate  the  attention  upon  the 
religious  thought  of  the  mature  Athenian  intellect. 

The  theologizing  philosopher  is,  in  a  sense,  an  anomaly;  yet  theology 
presents  an  irresistible  temptation  to  a  number  of  philosophic  minds; 
and  the  philosophizing  theologian  as  well,  is  a  not  unfamiliar  figure  in 
speculative  history.  And  so  Greek  speculation,  as  all  others,  presents 
two  distinct  phases:  the  philosophic,  or  rational;  and  the  theological, 
or  religious. 

Thus  Thales  philosophized  and  theologized  simultaneously,  and  not 
until  the  completely  reasoned  atheistic  and  skeptical  positions  of  the 
Atomists  and  the  Sophists  are  developed  is  the  reasoned  negation  of 
all  theological  opinion  reached. 

The  theological  reflections  referred  to  Thales  are  of  doubtful  authen- 
ticity and  questionable  import.  Anaxamander  of  Miletus  makes  the 
Infinite  the  principle  of  "all  things" ;  although  what  is  meant,  in  a  theo- 
logical sense,  by  the  Infinite  at  this  early  stage  of  inquiry  is  difficult  to 
determine.  The  Pythagoreans  were  exceptionally  religious,  symbolic, 
and  mystic;  so  much  so,  in  fact,  that  one  of  the  clearest  minds  of  the 
day  denied  the  validity  of  their  cosmological  conceptions;  repudiated 
the  metaphysical  Pythagorean  Many  and  recognized  Unity  alone  as 
the  fundamental  reality:  the  only  adequate  expression  of  true  being. 
Xenophanes  presents  the  most  significant  religious  conception  of  his 
time.  Aristotle^  says  that  Xenophanes  ''looked  up  to  the  whole  of 
Heaven  and  called  it  God."  Such  thought  leads  him  to  deny  the  Orphic 
and  Homeric  multiplication  of  divinities;  and  Timon,^  the  sillograph, 
styles  him  the  "wise  reprover  of  the  fallacies  of  Homer."  Xenophanes 
shows  the  human  mind  in  search  of  truth,  but  growing  conscious  of 
its  limitations,  and  the  endless  possibilities  of  error.  Timon^  lends  him, 
approximately,  the  following  thought: 

"Ah,  that  true  wisdom  were  mine,  clear,  prudent  and  truth  all  containing, 
For  the  dim  paths  that  I  follow  but  fade,  and  beguile  and  deceive  me; 
Ignorant,  weary  and  old,  adrift  in  the  mazes  of  error. 
Lost  in  the  One  and  the  All,  wherever  my  spirit  may  wander." 

A  mind  such  as  that  of  Xenophanes,  recognizing  an  all  controlling 
Unity  in  nature,  will  be  little  interested  in  speculations  of  men  dealing 


•  Metaph.  A.  $•  986  b  24. 
••Laertius,  DC.,  2,  p.  231. 

•  Sextus  Empiricus,  Pyrrh.  Bypot;  I.  a,  p.  99. 


402  Religion  Pt.  IV 

with  a  power  which  it  believes  transcends  their  every  conception.  In 
denying  the  mystical  and  symbolic  complexities  of  the  Pythagoreans, 
Xenophanes  repudiated  the  conventional  anthropological  divinities,  and 
referred  "all  things"  to  an  infinite  intelligent  Unity,  distinct  from  man  :^ 

One  is  God,  both  of  mortals  and  Gods,  forever  the  greatest; 
One,  neither  like  unto  men  in  mind,  nor  like  them  in  body; 
Intellect  all  is  this  God,  all  reason,  sight,  and  all  hearing, 
Ruling,  through  power  of  mind,  all  things;  and,  free  from  all  effort, 
Motionless  ever  he  is,  unmoved,  unchanged  and  unchanging. 
Mortals  forever  believe  that  the  gods  are  even  as  mortals; 
Having  such  senses  as  they,  in  voice,  in  sight  and  in  body; 
But  of  a  truth,  if  the  ox  or  the  lion  had  hands  for  contriving 
Things  in  the  manner  of  men,  then  horses  like  unto  horses, 
Oxen  as  oxen,  would  paint  their  gods,  and  make  them  as  they  are. 
All  that  is  worthy  of  blame  in  men  of  the  gods  is  recorded; 
Homer  and  Hesiod  tell  of  the  deeds,  both  shameless  and  lawless 
Done  by  the  gods:   adultery,  theft,  and  deceiving  each  other. 

Such  passages  show,  even  at  this  early  day,  that  the  highest  type  of 
Hellenic  mind  was  by  no  means  completely  entangled  in  the  confused 
theogonies  of  Orpheus  and  Homer. 

The  next  important  teleological  conception  among  the  philosophers  is 
the  Nous,  or  Intellect  of  Anaxagoras,  which,  as  Aristotle^  says,  he  employs 
to  introduce  order  in  the  Cosmos.  The  One  and  All,  or  the  Divine 
Unity,  of  Xenophanes  is  thus  developed  into  a  more  definite  entity, 
which  may  be  interpreted  as  a  conscious  Intelligence,  external  to  the 
phenomenal  world,  but  acting  upon  it  in  harmony  with  reason:  an  im- 
portant development  of  thought  theologically  considered. 

Empedocles  next  appears.  The  fragments  remaining  of  the  thought 
of  this  interesting  personality  contain  religious  speculations  of  the  most 
varied  nature.  To  reduce  these  to  a  consistent  whole  is  difficult.  They 
present  many  elements  purely  Eastern;  they  drift  to  Egypt  and  India, 
into  a  world  of  Pythagorean  mystics;  through  forms  of  the  most  daring 
transcendental  metaphysics,  only  to  be  suddenly  checked  with  scientific 
analysis  of  the  phenomenal  and  material.  The  following  is  perhaps  the 
simplest  statement  of  his  conception  of  the  Divinity  i^ 

"Mind  alone,  holy  and  pure,  all  mind  in  infinity  sweeping. 
Consciously,  swift,  and  free,  through  the  universe  everywhere  darting." 


'  Muilach,  Fragmenm  Philosophorum  Graecorum,  Vol.  I.,  v,  i.-j,  p,  IM-. 

*  Metaph.  A.  4.     985  a  18. 

*  Muilach.  Vol.  I.,  p.  12,  V.  395. 


Bk.  Ill  Greece  403 

These  few  notices  lead  to  the  period  of  Attic  philosophy,  and  the 
fullest  religious  expression  of  the  Greek  intellect. 

Article  2 — Socrates. 

The  advent  of  Socrates  occurred  at  one  of  the  critical  epochs  in  the 
history  of  philosophic  speculation,  Democritus  and  the  Atomists,  on 
one  side,  had  rationally  demonstrated  the  impossibility  of  the  existence 
of  incorporeal  or  supra-sensible  entities.  They  had  thus  developed  the 
scientifically  reasoned  position  of  what  is  known  in  speculation  as  the 
(puctq  aXoyoq,  or  the  Cosmos  considered  as  the  unconscious  and  imper- 
sonal amalgam  of  matter  and  motion.  The  elements  of  matter  thus 
become  the  principles  of  all  things  —  dgxaq  twv  bXwv  d'v6[L0\jq. 

The  Sophists,  on  another  side,  had  analyzed  the  Nous,  or  Intelligence, 
of  Anaxagoras  into  the  purely  subjective  opinion  of  the  individual 
human  consciousness,  and  thus  made  "man  the  measure  of  all  things": 
xdcvTwv  ^pT][JLaTwv  [lixpoy  avGpwxoq. 

These  two  positions  understood,  there  seems  little  room  for  philosophic 
theologizing;  yet  Socrates,  in  his  perfect  comprehension  of  them,  was 
able  to  undermine  the  then  existing  theories  of  knowledge  upon  which 
they  were  based,  and  consequently  makes  such  theologizing  possible. 
The  Phcedo  presents  a  vivid  impression  of  an  implicit  confidence,  not 
alone  in  God's  existence,  but  in  His  intelligent  and  spiritual  perfection. 
The  God  of  Socrates  is  an  infinite  spirit,  a  Being  in  whom  all  wisdom, 
truth,  and  beauty  lie  —  the  one  real  Existence  to  which  the  mind  of 
man  may  turn. 

"Shall  the  seeker  of  true  wisdom,"  he  asks,^  "who  cherishes  the  hope 
that  he  will  meet  with  it  nowhere  but  in  eternity,  be  grieved  at  death, 
and  not  rather  glad  to  go?  Surely  must  he  think  so,  friend;  for,  if 
a  philosopher,  he  will  be  firmly  convinced  that  he  will  find  true  wisdom 
in  the  other  world  alone." 

The  mortal  man  dies,  but  that  part  of  him  which  truly  lives  "takes 
its  flight  afar,  safe,  and  imperishable  ;"2  and  virtue  and  wisdom  are  the 
wings  of  the  soul  in  its  flight,  says  Socrates,^  and  it  behooves  us  to 
leave  nothing  undone  to  share  therein,  for^  "noble  the  reward  and  great 
the  hope."     xaXiv  yap  t&  aGXov  /.al  -f;  iXxlq  ^xB-^dX-q. 


»  Ph(Bdo.  68  A. 

*  Ibid.  106  E. 

'  i'heaetetus,  176  B. 

*  Phado,  114  C. 


404  Religion  Pt.  IV 

•  These  simple  and  explicit  statements  suggest  as  pure  a  religious 
atmosphere  as  any  of  the  great  religious  writings  of  the  world. 

Ethics  were  preeminently  the  "art"  of  Socrates,  and  occupy  an  im- 
portant position  in  the  system  of  Plato.  The  study  of  ethics  leads  to  the 
study  of  man  as  a  member  of  society;  the  principles  of  ethics  and  the 
principles  of  social  theory  are  identical  in  their  attempt  to  determine  the 
ultimate  relation  of  man  to  man.  It  is  then  in  society  that  the  proper 
development  of  ethical  theory  is  found.  The  Republic  presents  the 
political  and  social  conceptions  of  Socrates  and  Plato  in  their  final 
form.  A  study  of  the  chief  ethical  material  of  the  Republic  shows  the 
attempt  to  answer  the  all-important  question:  What  is  Justice; 
Justice  being  considered  necessarily  the  corner-stone  of  any 
rational  system  "of  social  and  political  organization.  What  then  is 
Justice? 

The  first  book  of  the  Republic  contains  probably  the  most  finished 
dialectic  ethical  material  in  existence.  Socrates  is  here  in  conversation; 
a  definition  of  Justice  is  required,  and  that  of  Simonides  is  accepted  as  a 
point  of  departure.  "Justice,"  has  said  Simonides  "is  to  render  each 
his  due."  The  discussion  of  Justice,  therefore,  develops  a  close  analysis 
of  this  position;  finally  formulated  in  the  statement  that  Justice  "benefits 
friends  but  injures  foes."  Socrates  opposes  arguments  advanced  from 
this  attitude,  on  the  ground  that  injury  must  beget  injury,  and  that 
injustice  must  beget  injustice;  in  other  words,  that  perfect  justice  re- 
cognizes no  distinction  between  friend  and  foe.  He  concludes,^  there- 
fore, that  "it  is  the  duty  of  a  just  man  neither  to  injure  friend  nor  any 
other."  This  is  the  same  ethical  conception  as  that  found  in  the  Tdo 
Teh  King,  the  Upanishads,  the  Book  of  the  Dead,  the  Texts  of  Buddha, 
the  Hebrew  Prophets,  and  in  fact  in  the  best  of  the  religious  writings  of 
the  world.  This  position  might  well  be  summarized  as  "doing  to  others 
as  we  would  have  them  do  to  us." 

Article  j  —  Plato. 

If,  among  the  works  of  Plato,  those  dealing  especially  with  Socrates 
are  separated  from  those  regarded  as  more  closely  approximating  Plato's 
own  later  speculations;  if  these  latter  are  compared  with  Aristotle's 
notices  of  Socrates,  Xenophon's  Memorabilia,  Diogenes,  Laertius, 
Apuleius,  and  other  Socratic  writers  on  one  hand;  and  the  maze  of  com- 
mentary, elucidation,  explanation,  and  elaboration  to  be  traced  from 

I     *De  Republica,  335  D. 


Bk.  Ill  Greece  405 

the  works  of  Plato  through  the  Alexandrian  and  patristic  writers,  to 
the  mysticism  and  symbolism  of  the  Middle  Ages  and  a  later  day;  certain 
distinctions  may  doubtless  be  drawn  between  the  God  of  Socrates  and 
the  God  of  Plato.  With  a  little  learning  and  a  little  metaphysics, 
almost  any  theistic  creation  may  be  developed  and  styled  "the  God 
of  Plato."  The  volume  of  material  renders  this  method  feasible  and  may 
be  drawn  upon  indefinitely,  in  support  of  any  position.  It  seems,  how- 
ever, that  another  method  might  be  adopted,  in  order  to  discover,  so 
far  as  possible,  Plato's  own  opinion  with  reference  to  the  Divinity, 
stated  in  its  simplest  and  most  authoritative  form.  This  method  would 
probably  lead  to  an  analysis  of  Plato's  works,  in  order  to  select  what 
seems  to  be  the  most  constructive  and  typical  of  these.  In  that  work 
might  then  be  sought  the  clearest  and  simplest  statement  to  be 
found  with  reference  to  the  subject.  That  statement,  in  Plato's 
own  words,  freed  from  any  interpretations  and  elaborations,  might 
thus  seem  the  most  definite  expression  of  Plato's  conception  of  the 
divine  nature.  . 

The  Republic  is  his  most  mature  and  constructive  work.  "The 
Republic,"  1  says  Grote,  "is  undoubtedly  the  grandest  of  all  his  com- 
positions; including  in  itself  all  his  different  points  of  excellence."  The 
Republic  presents  Socrates  in  a  new  light.  "He  is  no  longer,"  says 
Grote,2  "a  dissenter  amidst  a  community  of  fixed,  inherited,  convictions. 
He  is  himself  in  the  throne  of  King  Nomos:  the  infallible  authority, 
temporal  as  well  as  spiritual,  from  whom  all  public  sentiment  emanates, 
and  by  whom  orthodoxy  is  determined."  What  then  are  the  attributes 
of  the  Platonic  divinity  as  expressed  in  this  work?  "God,"  says  Plato,' 
"is  perfectly  simple  and  perfectly  true,  both  in  word  and  deed,"  /.oiAtB-^ 
apa  6  ©eoq  axXoGv  xal  aXT]6l(;  sv  xe  epyv  xal  ev  Xoytp. 

The  religious  literature  of  the  world  presents  no  characteristics  of  the 
gods  more  worthy  to  be  called  divine,  than  "perfect  simplicity  and 
perfect  truth."  Plato  says,^  with  reference  to  immortality,  "The 
gods  care  for  those  who  earnestly  seek  to  become  just,  and  in 
the  practise  of  virtue  to  become  like  God,  as  far  as  lies  in  hu- 
man power."  The  God,  the  immortality,  and  the  ethics  of  Plato 
and  Socrates  seem  in  fact  the  same  God,  the  same  immortality,  and 


1  Plato,  Vol.  III.,  p.  1 2 J. 
'  Ibid.,  p.  240. 
»  De  Republica,  3S2  E. 
•  Ibid.,  613  A. 


4o6  Religion  Pt.  IV 

the  same  ethics  as  those  of  the  greatest  religious  teachers  man's  nature 
has  evolved. 

Article  4 — Aristotle. 

The  next  great  figure  in  Hellenic  thought  is  Aristotle.  To  express 
in  a  few  words  the  theological  conceptions  of  this  great  man  is  no  light 
task.  Besides  the  difiiculty  and  obscurity  with  which  Aristotle  himself 
has  involved  the  subject,  other  difficulties  occur.  An  examination  of 
even  a  small  portion  of  the  mass  of  commentary  and  exposition,  crys- 
tallized around  this  powerful  mentality,  presents  ample  material  for 
referring  any  desired  religious  opinion,  or  lack  of  opinion,  to  the  "master 
of  those  who  know." 

The  following  passages  may  be  selected  with  reference  to  God:  The 
Deity  is  recognized  by  all  as  a  certain  First  Cause  and  Principle  of  things.  ^ 
"0  T£  ydp  ©eoq  Boxet  twv  akiwv  xaaiv  elvai  xaJ  apxT)  'Tt?;  Questioned 
with  reference  to  the  nature  of  this  divinity,  he  says^  it  is:  A  motionless 
First  Mover,  iizel  B'daTi  ti  xivouv  auTo  a/.(vT]TOv  6v;  which  itself 
generates  Motion:  'iczi  tofvuv  it  xat  0  y.tvet;  upon  which  nature,  and 
the  heavens  depend,  ex  xotauTY]?  apa  dgyrjq  i^pTT^Tat  6  oupaviq  xal  tj 
qjuatq;  which  generates  motion  through  infinite  time,  xtvec  yap  tov 
(Jcxeipov  xpo'^'Q'^;  necessarily  constituting  an  Entity,  i^  d\dyv.riq  apa 
iaxiv  ov;  generating  motion  as  that  which  is  loved,  xtvet  Ik  (b?  lpa)[xevov 
proportionately  excellent  and  beneficent,  xaJ  -^  ctvaYxj),  y.aXCiq  an 
eternal  substance,  otc  [jl^v  ouv  eaxtv  oucla  in;  di^:oq;  thus  constituting  a 
First  Principle,  /.al  outox;  dp^T);  without  motion  and  distinct  from  the 
phenomena  of  the  senses;  xal  axtvfjxoq  xai  xe^wpia^jLevY)  twv  a!a6r]T0)v; 
involving  no  magnitude  on  \i.iyeQoq  ouSiv  exetv;  without  parts  and 
indivisible,  dXk'  d)[iep-^q  y.od  dBta(psi:6<;  duxiv;  existing  independently  of 
matter,  'in  to(vuv  lauiaq  Ssl  Tdq  ouat'aqslvat  aveu  uXy]?;  the  essential 
element  and  principle  of  life,  e'xst  Se  w8t,  /,at  I^cot)  Be  ye  uiudpxst;  God 
is  an  animate  Being,  Eternal,  the  Highest,  and  the  Best,  <fix\xh  Zk  tov 
0e6v  elvat  t,(oov  dtStov  aptaxov;  whose  life  and  activities  are  eternal 
and  coextensive  with  the  essence  of  the  Divine  nature,  waxe  ^wt)  xat 
alwv  auyeyjjq  xat  dtBtoi;  uxapxst  i^4>  ©^tp;  such  then  is  God,  touto  ydp 
h  @e6q. 

It  is  not  difiicult  to  choose  certain  passages  from  the  most  authentic 
Aristotelian  writings;  and  with  a  little  freedom  in  rendering,  and  care 

>  Metaph.  A.  2.   9S3  a  8. 
*  Ibid.  A.  6,  7.     1071,  1073. 


Bk.  Ill  Greece  407 

in  juxtaposition,  to  attribute  theological  conceptions  to  Aristotle  that 
might  well  make  a  Zoroaster,  a  Mohammed  or  a  Hermes-Trismegistus 
turn  green  with  envy.  The  thought  of  this  really  great  intelligence 
possesses  a  speculative  and  metaphysical  significance  lacking  in  oracular 
and  aphoristic  utterance.  And  here  a  single  exception  will  be  made  in 
the  method  adopted  in  previous  inquiry;  instead  of  allowing  Aristotle 
to  speak  for  himself,  a  little  learned  commentary  and  interpretation 
will  be  consulted  with  reference  to  the  Aristotlelian  theology.  That 
monument  of  industry  and  erudition,  The  Intellectual  System  of  the 
Universe,  by  Doctor  Cudworth,  will  be  selected.  In  discussing  these  and 
other  passages  of  The  Metaphysics  the  learned  Doctor  says:^ 

"Now  what  Aristotle's  agent  understanding  is,  and  whether  it  be 
anything  in  us,  any  faculty  of  our  human  soul  or  no,  seems  to  be  a  thing 
very  questionable,  and  has,  therefore,  caused  much  dispute  amongst 
his  interpreters;  it  being  resolved  by  many  of  them  to  be  the  divine 
intellect,  and  commonly  by  others  a  foreign  thing.  Whence  it  must 
needs  be  left  doubtful,  whether  he  acknowledged  anything  incorporeal 
and  immortal  at  all  in  us.  And  the  rather  because,  laying  down  this 
principle,  that  nothing  is  incorporeal,  but  what  acts  independently 
upon  the  body,  he  somewhere  plainly  determines  that  there  is  no  intel- 
lection without  corporeal  fantasms.  That  which  led  Aristotle  to  all 
this,  positively  to  afl5rm  the  corporeity  of  sensitive  souls,  and  to  stagger 
so  much  concerning  the  incorporeity  of  the  rational,  seems  to  have  been 
his  doctrine  of  forms  and  qualities,  whereby  corporeal  and  incorporeal 
substance  are  confounded  together,  so  that  the  limits  of  each  could  not 
be  discerned  by  him.  Wherefore  we  cannot  applaud  Aristotle  for  this; 
but  that  which  we  commend  him  for  is  chiefly  these  four  things;  first, 
for  making  a  perfect  incorporeal  intellect  to  be  the  head  of  all;  and 
secondly,  for  resolving  that  nature,  as  an  instrument  of  this  intellect, 
does  not  merely  act  according  to  the  necessity  of  material  motions,  but 
for  ends  and  purposes,  though  unknown  to  itself;  thirdly,  for  maintaining 
the  naturality  of  morality;  and  lastly,  for  asserting  the  1:6  ^9'  TjtJLlv 
autexousy,  or  liberty  from  necessity." 

The  following  is  also  of  interest  in  this  connexion:-  "But  the  grand 
objection  against  Aristotle's  holding  the  world's  animation  is  still  behind; 
namely,  from  that  in  his  Metaphysics,  where  he  determines  the  highest 
starry  heavens  to  be  moved  by  an  immovable  mover,  commonly  supposed 
to  be  the  Deity  itself,  and  no  soul  of  the  world;  and  all  the  other  spheres 

«  Vol.  I.,  p.  97   .  'Ibid,  p.  268 


4o8  Religion  Pt.  IV 

likewise  to  be  moved  by  so  many  separate  intelligences,  and  not  by  souls. 
To  which  we  reply  that  indeed  Aristotle's  first  immovable  mover  is  no 
mundane  soul,  but  an  abstract  intellect  separate  from  matter,  and  the 
very  Deity  itself:  whose  manner  of  moving  heavens  is  thus  described  by 
him:  Kivet  hk  oyq  ipwpievov,  'it  moveth  only  as  being  loved.'  Where- 
fore, besides  this  supreme  unmoved  mover,  that  philosopher  supposed 
another  inferior  moved  mover  also,  that  is,  a  mundane  soul,  as  the 
proper  and  immediate  efficient  cause  of  the  heavenly  motions;  of  which 
he  speaks  after  this  manner:  Kivou^jievov  Bl  'zak'ka  y,tvet,  'that  which 
itself  being  moved,'  objectively,  or  by  appetite  and  desire  of  the  first 
good  'moveth  other  things.'  And  thus  that  safe  and  sure-footed  in- 
terpreter, Alex.  Aphrodisius,  expounds  his  master's  meaning,  that  the 
heaven  being  animated,  and  therefore,  indeed,  moved  by  an  internal 
principle  of  its  own,  is,  notwithstanding,  originally  moved  by  a  certain 
immovable  and  separate  nature,  which  is  above  soul,  xw  voetv  is  ccu'zh, 
v.(xl  eqjsfftv  xal  ope^iv  ex^'^  '^'O*?  ^lAOiwaewc;  aixoO  '  both  by  its  contemplat- 
ing of  it,  and  having  an  appetite  and  desire  of  assimilating  itself  there- 
unto.' Aristotle  seeming  to  have  borrowed  this  notion  from  Plato, 
who  makes  the  constant  regular  circumgyration  of  the  heavens  to  be  an 
imitation  of  the  motion  or  energy  of  intellect.  So  that  Aristotle's 
first  mover  is  not  properly  the  efiicient,  but  only  the  final  and 
objective  cause  of  the  heavenly  motions,  the  immediate  efficient  cause 
thereof  being  (J'ux'?)  xal  cpuuti;  '  soul  and  nature.' 

"Neither  may  this  be  confuted  from  those  other  Aristotelic  intelli- 
gences of  the  lesser  orbs;  that  philosopher  conceiving  in  like  manner 
concerning  them,  that  they  were  also  the  abstract  minds  or  intellects 
of  certain  other  inferior  souls,  which  moved  their  several  respective 
bodies  or  orbs  circularly  and  uniformly,  in  a  kind  of  imitation  of  them. 
For  this  plainly  appears  from  hence,  in  that  he  affirms  of  these  his  inferior 
intelligences  likewise,  as  well  as  of  the  supreme  mover,  that  they  do 
xtveTv  (I)?  T^Xo?  'move  only  as  the  end.' 

"Where  it  is  evident,  that  though  Aristotle  did  plainly  suppose  a 
mundane  intellectual  soul,  such  as  also  contained,  either  in  it,  or  under 
it,  a  plastic  nature,  yet  he  did  not  make  either  of  these  to  be  the  Supreme 
Deity;  but  resolved  the  first  principle  of  things  to  be  one  absolutely 
perfect  mind  or  intellect,  separate  from  matter,  which  was  d%hy]xo<;  ou<j(a 
'an  immovable  nature,'  whose  essence  was  his  operation,  and  which 
moved  only  as  being  loved,  or  as  the  final  cause:  of  which  he  pronounces 


Bk.  Ill  Greece  409 

in  this  manner:  "Otc  dx,  TotauTTj?  dpxriq  i^pTiQTat  b  oupaviq  x,al  t;  cpuatq: 
*  That  upon  such  a  principle  as  this  heaven  and  nature  depend' ;  that  is, 
the  animated  heaven,  or  mundane  soul,  together  with  the  plastic  nature 
of  the  universe,  must  of  necessity  depend  upon  such  an  absolutely 
perfect  and  immovable  mind  or  intellect. 

"Having  now  declared  the  Aristotelic  doctrine  concerning  the  plastic 
nature  of  the  universe,  with  which  the  Platonic  also  agrees,  that  it  is: 
y)  [ligoq  ^uxfiq,  75  [iri  aveu  '^^X'fiq,  'either  part  of  a  mundane  intellectual 
soul;'  that  is,  a  lower  power  and  faculty  of  it,  'or  else  not  without  it, 
but  some  inferior  thing  depending  on  it';  we  think  fit  to  add  in  this 
place,  that  though  there  were  no  such  mundane  soul,  as  both  Plato  and 
Aristotle  supposed,  distinct  from  the  Supreme  Deity,  yet  there  might 
notwithstanding  be  a  plastic  nature  of  the  universe  depending  im- 
mediately upon  the  Deity  itself.  For  the  plastic  nature  essentially 
depends  upon  mind  or  intellect,  and  could  not  possibly  be  without 
it;  according  to  those  words  before  cited:  'Ex  totauTiQ?  dgxfiq  i^pTTjTac 
i}  (puaiq,  'nature  depends  upon  such  an  intellectual  principle,' and  for 
this  cause  that  philosopher  does  elsewhere  join  voO?  and  cpujtq,  'mind 
and  nature'  both  together." 

To  any  one  at  all  familiar  with  celestial  matters  and  the  methods  and 
purposes  of  the  Divinity,  what  the  learned  doctor  has  done  in  the  fore- 
going passages  is  at  once  evident.  The  Aristotelian  deity  is  therein 
endowed  with  every  essential  for  the  fullest  development  of  which  the 
most  mystical  of  theologizers  could  dream.  The  xb  i(f'  T)txlv,  or  autexousy, 
may  be  used  to  put  the  uXixi]  (ivay/.T],  or  mechanical  necessity,  of  the  phy- 
sicists to  flight;  the  lb  eu  xal  xaXw<;,  the  "orderly  regularity  and  harmony 
of  the  mundane  system,"^  which  is  readily  developed  from  the  xtvslv  ox; 
liXoq  and  the  xtvsl  M  oiq  IpwpLsvov  may  put  the  (fvaiq  aXoYoq,  or 
purposeless  nature  and  the  xdcvTwv  xgvi'^dxoi^/  yieTpov  avOpoxoi;  or  "man 
the  measure  of  all  things,"  of  the  Atomists  and  the  Sophists  to  shame. 
What  may  not  be  done  with  a  "plastic  nature  of  the  universe"  which 
is  Ti  (JLspog  <|"JX'0?>  ^  [^'^  '^'^s'J  ^ux"^<;  "either  part  of  a  mundane  intel- 
lectual soul,  that  is,  a  lower  power  and  faculty  of  it,  or  else  not 
without  it,  but  some  inferior  thing  depending  on  it;"  when  at  the  same 
time,  every  justification  is  presented  for  combining  the  voOi;  and  the 
(fuaiq,  mind  and  nature.  When  "an  immovable  first  mover"  is 
recognized  and  that  i%  TotauTT]*;  apx^i?  ripx-qxai  6  oupavi?  xat  •?)  (putrt; 
"heaven   and   nature   depend   upon  such   an   intellectual  principle," 

>  Cf.  Ibid.,  p.  275. 


4IO  Religion  Pt.  IV 

and,  beside  this  "supreme  unmoved  mover,"  "another  inferior  moved 
mover"  is  also  assumed;  "that  is,  a  mimdane  soul,  as  the  proper  and 
immediate  efficient  cause  of  the  heavenly  motions."  Which  may 
be  pictured  as  being  moved,  "objectively,  or  by  appetite  and  desire 
of  the  first  Good,"  and  "which  moveth  other  things."  What 
indeed  may  not  be  achieved  in  theological  metaphysics  when  the  "cir- 
cumgyrations of  the  heavens  are  regarded  as  an  imitation  of  the  motion 
or  energy  of  intellect"  if  this  circumgyration  is  brought  in  mystic  con- 
tact with  "  these  other  Aristotelic  intelligences  of  the  lesser  orbs?  "  Not 
forgetting  that  that  philosopher  conceived  "in  like  manner  concerning 
them,  that  they  were  also  the  abstract  minds  or  intellects  of  certain 
inferior  souls,  which  moved  their  several  respective  bodies  or  orbs  cir- 
cularly and  uniformly  in  a  kind  of  imitation  of  them,"  especially  as  it 
plainly  appears  from  hence,  in  that  he  affirms  of  these  his  inferior  intel- 
ligences likewise,  as  well  as  of  the  supreme  mover  that  they  do  /.tveiv 
b)q  xi^oq  'move  only  as  the  end?'"  The  Aristotelian  divinity,  thus 
expounded  and  elucidated,  glitters  with  inviting  possibilities;  is  pregnant 
with  every  theistic,  mystic,  and  metaphysical  potentiality,  and  capable 
of  any  theological  development  in  any  direction. 

The  same  Aristotelic  deity  may  now  be  examined,  as  developed  in 
another  mind  from  these  same  passages  of  the  same  Aristotelian  writings, 
in  comment  upon  these  same  commentaries  of  the  illustrious  author  of  the 
Intellectual  System  of  the  Universe.  This  deity  has  just  been  studied 
through  a  mystical  telescope,  soto'speak,  in  relation  to  the  "heavenly  orbs" ; 
it  may  now  be  examined  under  a  microscope,  in  relation  to  the  texts  of  Aris- 
totle, remembering  that  the  pen  of  the  great  Mosheim  commands  a  per- 
haps not  less  vast  body  of  scholastic  erudition  than  that  which  inscribed 
the  Intellectual  System.  Says  this  learned  scholar  in  comment  upon  the 
Aristotelian  writings  and  the  foregoing  passages  from  Cudworth:^ 

"  'The  soul  is  moved,'  says  Aristotle.  'It  is  therefore  moved  by  some- 
thing else,  it  cannot  originate  motion.'  See  De  Anim.  lib.  i.  Cap.  2.  p.  4. 
Therefore,  since  Aristotle  altogether  opposed  an  endless  progression, 
and  did  not  doubt  that  there  is  in  the  universe  some  first  principle  of 
motion,  it  was  fit  that  he  should  attribute  immobility  to  this  first  cause 
whence  motion  proceeded.  For  if  he  had  alleged  that  this  cause  moved, 
he  would  have  required  a  higher  ascent  to  be  made,  and  must  have 
inquired  for  a  new  cause  of  motion.  But  Aristotle  clearly  perceived  that 
no  small  difficulty  would  arise,  how  that  which  is  not  itself  moved  can 

•Ibid.,  Vol.  I.,  pp.  269-270  (note). 


Bk.  Ill  Greece  411 

move  and  excite  other  beings.  In  order  that  he  might  meet  this  difficulty 
he  conceived  that  it  was  enough  to  determine  as  to  the  manner  in  which 
the  first  cause  moved,  that  it  entirely  differs  from  all  other  kinds  of  motion 
traceable  in  the  universe.  But  he  does  not  by  this  means  meet  the 
whole  difficulty.  They  who  are  disposed  to  pursue  the  inquiry  may  go 
on  and  ask:  What  kind  of  motion  is  this?  Aristotle  therefore  en- 
deavours in  this  chapter  to  answer  this  very  natural  inquiry.  He  says 
forsooth  that  Deity  moves  wq  excButxiQxiv,  dx;  zb  dpexTiv,  ox;  votqt^v,  dx; 
dpwtxevov  'as  a  thing  to  be  desired,  and  a  thing  longed  for,  as  intelligible 
and  loved.'  Every  one  explains  these  terms  according  to  his  own  views; 
some,  desirous  of  throwing  light  upon  their  master,  introduce  readers 
into  new  difficulties  through  their  imperfect  conception  of  the  force  of  the 
words  and  phrases  employed.  .  .  .  But  there  was  no  reason,  I 
fancy,  why  learned  men  should  have  taken  such  pains.  For  these  words 
and  phrases  are  only  specimens  of  the  verbiage  under  which  Aristotle 
conceals,  as  he  sometimes  does,  his  own  ignorance.  The  brevity 
and  obscurity  which  he  employs,  show  that  he  was  conscious  that 
he  could  not  explain  the  true  nature  of  that  motion  which  Deity, 
himself  immovable,  produces;  yet  he  seems  to  have  understood  very 
well  that  he  must  repress  the  urgency  of  curious  inquirers  by  new  and 
unwonted  words  and  phrases  thrown  out  as  a  sop  to  Cerberus.  Had  he 
been  conscious  that  he  could  meet  the  expectation  of  readers,  he  would 
have  spoken  with  much  greater  clearness  and  perspicuity.  The  whole 
force  of  the  sentence,  'Deity  moves  as  a  thing  to  be  desired  and 
loved,'  will  appear  on  examination  to  be  very  little  different  from  the 
following.  'Deity  moves  without  trouble  either  to  itself  or  others;  as 
they  who  are  loved  by  their  friends  can  give  commands  even  by  a  wink 
of  the  eye,  and  effect  whatever  they  please,  even  though  they  themselves 
do  nothing.'  Which  is  the  same  as  saying:  *I  do  not  know  how  he 
excites  motion,  who  himself  is  unmoved.  I  know  this,  indeed:  that  he 
does  not  move  as  other  natures  move,  which  even  while  they  move, 
themselves  supply  the  force  by  which  they  are  impelled.'  What  else 
can  this  be  called  than  concealing  ignorance  with  fine  words,  and 
seeming  to  say  a  great  deal  when  really  nothing  is  said.  Let  competent 
judges  decide  whether  it  is  credible  that  the  Stagirite  wished  by  these 
words  to  maintain  that  there  is  in  the  highest  orb,  over  which  he  placed 
the  Deity,  a  peculiar  soul,  which  moves  it;  Deity  only  looking  on  and 
not  effecting  the  motion.  ...  On  what  ground  the  words  which 
follow,  xivou^jLEVov  H  "z^XKa  xtvei  are  referred  to  the  mundane  soul,  I 


412  Religion  Pt.  IV 

cannot  discover.  They  simply  mean,  that  which  is  moved  communicates 
motion  to  other  things.  Nothing  can  be  more  simple  or  more  con- 
sistent with  the  philosophy  of  Aristotle.  I  have  pursued  this  point  so 
much  the  farther,  because  I  perceived  with  regret  that  in  explaining 
this  part  of  the  Metaphysics  of  Aristotle,  which  treats  concerning 
Deity  and  intelligent  agents  interpreters  toil  very  much,  and  imagine 
a  good  many  things,  no  trace,  of  which  can  be  found  in  the  philos- 
opher's writings."  Mosheim^  says  on  another  page  with  reference  to 
the  God  of  Aristotle,  "Nay  more,  I  consider  the  difference  to  be  but 
a  slight  between  his  God  and  the  gods  of  Epicurus." 

The  inquirer  who  has  given  a  little  attention  to  the  study  of  the  natural 
history  of  divinities,will  recognize  that  two  divinities  of  distinct  varieties 
are  here  discovered;  yet,  strange  to  say,  both  sprung  like  Athene  from 
the  brain  of  Aristotle.  The  first  divinity  belongs  to  the  well-known 
Alexandrine  Hebraico-mystic  family,  and  might  be  indexed,  in  a  col- 
lection of  such  interesting  creations,  as  the  deus-cahalisticus  metaphysico- 
mysticus  Aristotelis-Cudworthianus.  The  second  divinity,  by  means 
of  this  instructive  science,  is  easily  classified  as  the  divus-diabolicus 
individuus-Democritii-Aristotelis-Mosheimiensis. 

The  teleologico-mystic  Aristotleian  divinity  sparkling  in  the  pages  of 
Doctor  Cudworth  is  here  suddenly  transformed  into  a  mere  mechanico- 
atomic  conception,  or  disappears  in  a  cloud  of  verbiage  behind  which 
Aristotle  hides  his  own  ignorance.  And  such  would  indeed  seem  the 
inevitable  result  in  attempts  to  explain  or  interpret  the  words  of  men 
dealing  with  subjects  which  permit  of  no  rational  or  scientific  demonstra- 
tion, and  which  every  individual  may  expound  or  interpet  as  desired. 
Such  attempts  lead  to  nothing  but  dreary  repetitions  of  threadbare, 
brain-spun  futilities  appearing  again  and  again  throughout  the  field 
of  theological  polemics,  in  endless  re-interpretations  and  reiterations. 
Aristotle  has  been  selected,  in  the  present  instance,  as  a  peculiarly 
favourable  source  at  which  a  little  study  of  theological  commentary  and 
elucidation  might  be  undertaken;  for  the  reason  that  the  mind  of 
Aristotle  is  one  of  the  most  rarely  clear  and  consistent  in  the  history  of 
thought.  If,  then,  these  are  the  results  of  such  commentary  and  elucida- 
tion when  applied  to  this  intelligence,  what  must  be  the  results  of 
such  commentary  applied  to  the  words  of  men  whose  chief  claims  to  con- 
sideration are  perhaps  neither  luddity  nor  consistency?  Such 
interpretations  suggest  the  possibility  that  the  body  of  elaboration  and 

« Ibid,  Vol.  IL,  p.  93  (note). 


Bk.  Ill  Greece  413 

elucidation,  crystallized  around  every  great  religious  teacher,  may  serve 
no  purpose  other  than  that  of  a  heavy  pall,  hiding  his  true  thought 
and  growing  ever  denser. 

He  who  opens  the  works  of  Aristotle,  without  any  theistic  predi- 
lections, is  brought  in  contact  with  a  great  and  rational  intelligence, 
keenly  alive  at  every  step  to  the  limitations  of  its  own  legitimate  action, 
and  fearful  of  transcending  these;  an  intelligence  which,  in  its  attempt 
to  deal  with  the  ultimate  problems  of  existence,  is  conscious  that  these 
may  only  be  approached  by  the  human  reason  through  the  most  highly 
generalized  abstractions  of  which  it  is  capable.  Aristotle,  therefore, 
possessing  a  rational  and  scientific  intelligence,  can  only  refer  his  Divinity, 
or  First  Principle,  to  these  abstractions.  The  theistic  mind,  in  its 
conceptions  of  the  Divinity,  exhausts  the  linguistic  superlatives  at  its 
command;  the  rational  mind,  in  so  far  as  it  attempts  to  conceive  the 
Divinity  at  all,  exhausts  its  capacity  for  the  production  of  ultimate, 
abstract  generalizations.  At  this  point,  they  both  cease  to  act,  and  the 
attempt  of  the  finite  to  contain  the  Infinite  is  ended. 

There  are  thus  two  points  of  view  from  which  the  ontological  specula- 
tions of  Aristotle  may  be  studied:  the  philosophic  and  the  theistic. 
From  the  first,  an  accurate  intelligence  is  seen  exhausting  itself  in  a 
series  of  the  widest  generalizations  of  which  it  can  conceive;  from  the 
theological  point  of  view,  it  will  suflSce  to  say  that  the  God  of  Aristotle 
possesses  a  chameleon-like  adaptability.  No  body  of  speculative  ma- 
terial in  the  world  offers  the  suggestive  potentialities  of  the  Metaphysics 
of  Aristotle;  and  any  genuine  theologizer,  versed  in  celestial  affairs 
and  Greek  metaphysics;  any  one  at  home  among  the  "circumgyrations  of 
the  heavens,"  and  the  "intelligences  of  the  lesser  orbs,"  who  appreciates 
the  limitless  possibilities  of  the  '  mundane  intellectual  Soul'  of  the  vouq, 
and  the  (puctq  distinct  and  combined,  of  the  t6  i(p'  tj^jlIv,  and  the  1:6  su 
xalxaXwqof  the  l^wovatotov  (Xptaxov,  of  the  ouala  Tt?  at8to<;,  of  the  aveu 
uXf)?  and  the  xtvel  Zk  ox;  ipw^j-evov;  will  soon  be  able  to  develop  the  Movaq 
and  the  Tptaq,  the  mystic  Kabbalah  or  anything  else  for  that  matter, 
in  the  writings  of  Aristotle  and,  doubtless,  at  the  same  time  the 
d[xa6(a  i\q  \^<xka  x'^Xzxi)  "a  most  grievous  ignorance,  sottishness  and 
stupidity  of  mind,"^  in  those  who  may  not  happen  to  agree  with  him. 

With  reference  to  immortality,  Aristotle  2  says  that  we  cannot  see 
the   future  —  dxec8-f)  t6  (xeXXov  d(pavd<;  TjtJ-Iv;    This,  however,  need  be 

>  Cf.  Cudworth.  Vol.  I.  p.  279. 
*Eth.  Nic,  A.  II.  iioi  a  17 


414  Religion  Pt.  IV 

no  discouragement  to  those  of  wider  range  of  vision.  A  great  number 
of  authorities  may  be  foimd  supporting  every  variety  of  opinion,  with 
reference  to  the  views  of  Aristotle  and  the  student  who  follows  the 
subject,  will  be  led  into  the  thick  of  a  "mighty  controversy,"  in  which 
learned  scholars  train  ponderous  Latin  folios  and  quartos  upon  each 
other  in  the  most  masterly  and  impressive  manner.  As  Aristotle 
himself  said  that  he  knew  nothing  about  the  subject,  however,  and  as 
there  is  strong  probability  that  such  was  actually  the  case,  this  con- 
troversy will  not  be  pursued. 

In  the  Niclwmachean  Ethics^  Aristotle  says  that  the  just  man  feels 
toward  his  friend  as  toward  himself,  for  his  friend  is  but  another  self: 
eaxt  ydp  6  cplXoq  aXXoq  au'z6q. 

Again,  on  being  asked,  how  we  should  treat  our  friends,  he  says:^ 
*'As  we  wish  them  to  treat  us"  — ox;  av  su^af^jLeOa  a^zobq  ^\uv  Xfoa- 
^IpeaGat. 

Thus  the  attempt  to  develop  the  ontological  and  ethical  con- 
ceptions of  Aristotle,  from  his  own  words,  might  lead  to  some 
such  summary  as  the  following:  Aristotle  Apparently  recognized 
a  First  Cause,  or  Principle  of  things,  which  may  be  interpreted 
as  desired;  he  seems  to  have  regarded  the  future  as  "invisible," 
and  said  that  we  should  treat  our  friends  as  we  would  have  them 
treat  us. 

The  speculations  of  these  two  men,  Plato  and  Aristotle,  seem  to  serve 
as  poles  toward  which  the  thinking  mind  is  drawn  as  long  as  it  continues 
to  move;  they  present  what  might  be  called  the  extremes  of  the  oscil- 
lations of  the  mtellectual  pendulum,  the  two  conflicting  methods  of  the 
human  mental  process:  the  deductive  and  the  inductive;  and  no  thought 
of  the  world  develops  higher  flights  of  pure  speculation,  on  one  side^ 
or  offers  abler  attempts  of  the  finite  to  transcend  the  conditions  of  its 
own  existence,  on  another. 

Article  5 — Cleanthes. 

Later  Greek  religious  thought  nearly  all  revolves  round  the  mind  of 
Plato  and  need  not  be  examined  at  length.  The  Stoics  of  the  Graeco- 
Roman  world  seem  to  have  been  men  of  purest  religious  aspirations. 
Their  thought  cannot  be  better  voiced  than  in  the  Hymn  to  Zeus  of 
Cleanthes, 3  of  which  the  following  lines  are  a  feeble  reflection: 

•  I.  4.  1 166  a  32. 

•  Laertiua,  V.  i,  p.  115. 

•  Stobaeus,  Physica  I.  a. 


Bk.  Ill  Greece  41S 

HYMN    TO    ZEUS 

O  Zeus,  most  glorious  of  the  immortal  powers, 
Arch-King  of  many  names  and  one  decree. 
Hail !    Thou  whose  deathless  might  o'er  nature  towers, 
For  mortals  right  it  is  to  speak  to  Thee. 

Thou  art  our  lile,  and  naught  but  echoes  dim. 

Of  Thee  is  all  that  creeps  through  death  and  birth, 

To  Thee  I  sing;  Thy  might  I  ever  hymn 

As  at  Thy  nod  the  heavens  sweep  round  the  earth. 

Strong,  \viLling  slaves  hast  Thou,  who  never  tire 
But  flash,  from  out  Thy  hand  unconquered  hurled, 
Swift  forked  tongues  of  ever-Hving  fire 
Through  deep-toned  thunders  o'er  a  trembling  world- 

A  world  which  thine  own  law  shaU  right,  and  flow 
Through  all  existent  things,  and  these  combine; 
And,  blending  with  the  least  and  greatest,  show 
How  great  the  God  of  aU:  supreme,  divine. 

For  naught  existence  has,  to  come  or  past. 
Or  breathes  on  earth,  except  as  by  Thy  leave; 
Nor  in  the  ether  far,  nor  ocean  vast : 
Save  where  the  erring  their  own  sorrows  weave. 

But  Thou  shalt  right  the  wrong,  the  best  maintain, 
To  Thee  disorders  but  Thy  law  fulfill; 
To  Thee  aU  things  are  good;  Thou  shalt  ordain 
All  in  one  Harmony,  and  good  from  ill. 

Good  which  bhnd  mortals  stiU  in  error  fly; 

lU-fated  souls  who  seek  what  they  possess; 

Nor  see  nor  hear  the  law  of  God  on  high, 

Which,  yielding,  would  their  lives  with  Reason  bless. 

Thus  some  avoid  the  Good,  while  others  haste 
Through  warring  strife  for  bubbles  name  and  fame; 
And  some  in  greed,  and  some  in  dalliance,  waste 
In  idle  sense  their  lives,  all  lost  to  shame. 

But  Thou,  all  giving  Zeus  of  thunder's  throne, 
From  out  his  wretched  error  free  mankind. 
Dispense  the  clouds,  O  Father,  let  be  known 
With  what  just  purpose  Thou  hast  all  designed. 

Thus  man  may  sing  Thy  works  as  mortal  should 
And,  honouring  him,  may'st  Thou  too,  honoured  be, 
For  not  for  men  nor  gods  is  greater  good 
Than  e'er  to  hymn  Thy  wondrous  works  and  Thee. 


4i6  Religion  Pt.  IV 

The  highest  religious  thought  of  Greece  evolves  the  same  ontological 
conceptions  developed  by  civilized  man  in  every  part  of  the  world;  the 
same  intelligent  spiritual  Divinity,  the  same  union  of  man  therewith  as 
his  highest  hope  of  immortality,  and  the  same  ethical  code  found  in  the 
best  of  all  other  religious  systems. 


CHAPTER  XI 

ROME 

THE  thought  of  Rome  requires  no  lengthy'  analysis  in  the 
present  connexion.  '  The  intellectual  Latin  world  is  to  that 
of  Greece  as  moonlight  to  the  sim.  The  banks  of  the  Tiber 
present  but  feeble  reflections  of  the  flame  that  glowed  at  the 
shrine  of  Athene.  The  Greek  dominated  the  intellectual  world  of 
Rome  as  completely  as  the  Roman  legion  the  political  world  of  its  day; 
and  by  the  same  right — sheer  might.  "It  was  no  longer  a  small  rivulet," 
says  Cicero,^  "flowing  from  Greece  toward  Rome,  but  a  deep  and 
mighty  torrent  of  Grecian  art  and  thought." 

In  the  Roman  world,  as  in  that  of  Greece,  appear  the  usual  popular 
poets  singing  the  usual  confused  and  inconsequent  theological  myths 
and  legends;  the  inevitable  array  of  oracles  and  sibyls,  in  control  of 
priest  or  politician;  voicing  ambiguous  utterances  purporting  to  be 
inspired  from  on  high:  while  augurs,  di\iners  and  soothsayers  interpret 
the  "signs  and  wonders"  as  augurs,  diviners,  and  soothsayers  alone  know 
how.  On  another  side  some  of  the  clearer  and  abler  intellects,  conscious  of 
the  useless  dangers  and  inanity  of  such  superstititions,  unite  in  the  great 
hymn  to  nature  of  Lucretius,  and  deny  all  divine  influences  whatever: 

These  things  well  learned  and  held  in  mind,  we  see 

That  nature  of  herself  aD  things  can  do,  ^ 

Without  the  Gods,  from  haughty  masters  free.* 

With  reference  to  Jove,  Mercury  and  the  rest  of  the  celestial  nomen- 
clature, Pliny^  says,  "Who  does  not  refer  them  to  natural  phenomena? 
Can  we  believe  that  the  great  head  of  all  things,  whatever  it  may  be 
interests  itself  in  human  affairs?  Can  we  doubt  that  it  is  unpolluted 
by  such  a  sad  and  complicated  office?" 

Beside  these,  another  group  of  men,  conscious  of  the  absurdities  of 
what  the  priest  and  politician  called  religion,  yet  unsatisfied  with  the 
blanks  of  Atomism  and  Atheism,  looks  to  a  higher  power  and  a  nobler 
"rerum  natura"  than  that  of  which  poet  or  philosopher  could  tell.    In 

'  De  Re  Publica,  II.  19,  p.  310. 

•  De  Rerum  Natura.,  II.  1090. 

•  Nal.  Hist..  U..  7  (S)  P.  74- 


41 8  Religion  Pt.  IV 

turning  to  Rome,  in  search  of  the  best  religious  and  ethical  thoughts  one 
figure  dominates  all  others.  Cicero  must  doubtless  be  chosen  as  typical  of 
the  best  Rome  has  to  give  in  this  connexion;  "  the  man  whom  Rome  when 
free  called  the  father  of  his  Country,"  as  Juvenal^  says,  and  whom  Pliny ^ 
hails  as  "the  father  of  Roman  eloquence  and  literature  as  well." 

The  religious  and  ethical  conceptions  of  Cicero  are  identical  with 
those  of  Plato.  All  his  discourse,  he  says^  in  his  essay  on  Virtue,  is 
derived  from  the  great  Hellene  as  from  some  "sacred  and  hallowed 
fountain."  His  recognition  of  divine  unity,  intelligence  and  man's 
immortal  nature,  cannot  be  better  or  more  clearly  expressed  than  in  a 
single  passage  from  the  Somnium  Scipoinis  in  which  Africanus  appears 
in  a  dream  and  bids  him  follow  the  example  of  the  great  men  of  the  past: 
"  Follow  them,"  he  says,^  "and  regard  your  body  not  yourself  as  mortal; 
not  that  it  is  which  is  evident  to  sense  that  constitutes  your  true  being; 
but  your  soul.  Know  that  you  are  divine,  for  a  God  it  is,  that  lives 
and  feels,  that  remembers  and  foresees,  that  rules,  controls,  and  moves 
the  body  over  which  it  presides  as  the  God-head  rules  the  world.  For 
as  the  God  eternal  moves  all  that  is  mortal  in  this  world,  so  the  immortal 
soul  of  man  moves  his  fragile  body  here  below." 

With  that  of  all  great  ethical  thinkers,  the  mind  of  Cicero  turns  to 
the  study  of  man  in  society  and,  with  Lao-tsze  and  Socrates,  he  ex- 
presses the  opinion  that  the  bulk  of  human  error  and  confusion  is  trace- 
able to  the  unnecessary  conflict  between  the  immutual  laws  of  nature 
and  the  artificial  regulations  of  mankind.  He  says,^  in  developing  a 
thought  concerning  justice  in  his  essay  on  the  Laws:  "Justly  did  Soc- 
rates execrate  him  who  first  drew  a  distinction  between  utility  and 
nature,  for  he  used  to  complain  that  this  was  the  source  of  all  human 
error.  In  the  words  of  Pythagoras,  the  goods  of  friends  are  "common" 
and  "friendly  equality,"  from  which  it  is  evident,  when  a  wise  man  dis- 
plays that  natural  benevolence  to  one  of  equal  virtue,  that  that  occurs 
which  is  to  some  incredible,  but  which  necessarily  follows:  namely, 
that  he  values  himself  no  more  than  the  other,  for  what  difference  can 
occur  where  interests  are  identical?  Where  interests  differ,  however 
slightly,  true  friendship  ceases,  the  nature  of  which  is  that  one  regards 
others  in  the  same  light  as  that  in  which  one  regards  one's  self." 


'  Sat.  VIII.,  243. 

2  Nat.  Hist.  VII.,  30  (31),  p.  29. 

'  Tusc.  Disp.  v.,  13,  p.  34- 

*  De  Re  Publica,  VI.,  19,  p.  347. 

'  De  Legibus,  I.,  12,  p.  370. 


Bk.  Ill  Rome  419 

In  these,  and  in  other  passages  of  Cicero,  occur  the  same  ethical  con- 
ceptions developed  in  all  the  great  religious  writings  of  the  world.  The 
principle  seems  to  remain  the  same,  and  is  merely  expressed  in  different 
words  or  evolved  from  different  positions.  Restated,  as  formulated  by 
Cicero  in  The  Laws  and  elsewhere,  it  seems  to  be  as  follows:  Justice, 
Natural  Law,  and  Right  Reason  consist  in  respecting  the  natural  rights 
and  interests  of  others  as  one's  own.  The  God,  the  belief  in  the  im- 
mortal nature  of  man,  and  the  ethical  conceptions  of  the  great  Roman 
jurist  and  administrator  seem  the  same  God,  the  same  belief,  and  the 
same  ethics  developed  by  all  the  great  creeds  in  existence. 

It  is  not  difficult  to  cite  a  number  of  passages  from  the  best  minds  of 
the  Latin  world,  showing  their  religious  and  ethical  views  to  be  in 
practical  harmony  with  those  of  Cicero.  *'You  are  a  part,  drawn  from 
the  Divinity,"  says  Epictetus.^  "Wretch,"  he  continues, ^  "you  carry 
about  a  God  within  you  and  you  know  it  not."  "All  is  gain  to  me,  O 
nature,"  says  Antoninus,^  "which  bring  the  changing  seasons.  From 
Thee  all  things,  in  Thee  all  things,  and  to  Thee  all  things  return.  The 
poet  says,  dear  city  of  Cecrops;  wilt  thou  not  say  dear  city  of  Zeus?"  A 
study  of  the  Roman  writers  of  the  higher  type,  such  as  Seneca,^  Juvenal,^ 
Persius,^  and  Tacitus,^  reveals  thought  of  a  closely  allied  nature,  and  leads 
to  the  opinion  that  the  clearer  intellects  form  much  the  same  conceptions 
of  the  Divinity,  immortality,  and  ethics  in  all  ages,  all  tongues,  and  all 
climes.    Traces  of  a  sane  monotheism  may  be  found  even  in  Virgil.^ 

Thus  the  best  minds  of  Rome  seem  to  unite  in  the  ethical  conceptions 
of  the  best  body  of  religious  writings  elsewhere.  Even  the  witty  and 
wordly  Martial^  says: 

"Not  in  fine  words  in  this,  Marcus, 
If  you  would  be  loved  you  must  love." 

"Divine  it  is,"  says  Pliny,^^  "for  mortals  to  assist  their  fellows,  and 
this  is  the  path  to  eternal  glory."  The  words  of  this  "atheist" 
would  grace  any  body  of  religious  material  in  the  world. 

1  Dissertationes,  II.,  8,  ii,  p.  125. 

5  Ibid.,  II.,  8,  12,  p.  125. 

'  C ommcnlarii ,  IV., 23,  p.  38. 

•  Ep.  CVIL,  Nat.  Q.  II.45. 
»  Sat.,  XV,  147. 

»  Sat..  II.,  71.     Sat.,  III.,  35. 
'  Close  of  the  Life  of  Agricola. 

•  JEneidos,  VI.,  724.     Georg.,  IV.,  220. 

•  VI..  XI. 

"  Nal.  Hist.,  II.,  7  (S).  P-  74- 


CHAPTER  XII 

SUMMARY 

THE  foregoing  brief  inquiry  into  the  "nature  of  the  gods," 
as  Cicero  would  say,  has  been  undertaken  with  the  object  of 
discovering,  if  possible,  the  essential  elements  underlying  the 
best  religious  thought  of  the  world. 
In  the  Republic  of  Thought  stand  a  few  great  figures,  dominating 
wholly  or  in  part  the  religious  life  of  the  race  or  peoples  coming  under 
their  influences.  The  minds  of  these  men  may  be  roughly  divided  into 
two  classes:  One,  turning  its  attention  to  man  as  a  member  of  human 
society,  another,  regarding  him  as  the  manifestation  of  a  power  other 
than  earthly.  Within  the  first,  may  be  grouped  such  minds  as  those  of 
Confucius,  Aristotle,  Buddha,  Pliny,  and  men  who  believe  it  impossible 
for  man  ever  to  "determine"  the  Absolute  in  a  philosophical  sense;  and 
who  are  convinced  of  the  futility  of  the  attempt.  These  men,  therefore, 
confine  their  observations  of  nature  to  the  phenomenal  world,  upon  which 
their  conclusions  are  based.  The  second  class  is  represented  by  men  of  a 
more  spiritual,  or  religious,  tendency;  minds  of  this  type  seize  upon  the 
Divinity  at  once,  subjectively,  as  their  point  of  departure.  In  this  class 
will  be  grouped  such  teachers  of  Lao-tsze,  the  Vedantists,  Zoroaster, 
the  tragic  poets  of  Greece,  the  ancient  Egyptian  religionists,  Mohammed, 
Socrates,  Plato,  Seneca,  and  Cicero.  The  first  class  can  scarcely  be 
regarded  as  forming  a  body  of  characteristically  religious  thought;  it 
approaches  the  problems  of  existence  from  the  rational  attitude  and 
bases  its  inductions  upon  experience.  When  men  of  this  tj^pe  approach 
religious  problems,  they  do  so  in  a  purely  scientific  manner;  their  opinions, 
therefore,  are  philosophic,  rather  than  religious.  The  second  class  of 
thought  represents  peculiarily  religious  elements.  If,  now,  this  thought  is 
analyzed  at  its  fountain-heads,  it  seems  that  all  intellects  of  this  type  unite 
in  one  unvarying  creed;  a  creed  which  might  well  be  called  the  Creed  of 
creeds,  or  the  Religion  of  religions.  Wherever  this  type  of  intelligence 
is  found  in  its  highest  form  it  invariably  formulates  the  same  conceptions. 
Whether  under  the  shadow  of  the  great  wall  of  China  or  the  Pyramids, 
whether  on  the  banks  of  the  Ganges  or  Euphrates,  whether  it  flows  through 

420 


Bk.  Ill  Summary  421 

the  beautiful  measures  of  ancient  Hellas  or  the  more  sombre  syllables 
of  Rome,  this  Creed,  whatever  the  sounds  of  the  tongue  attached  to  its 
God  or  its  prophet,  never  seems  to  vary  in  the  thought  which  lies  be- 
yond the  soimd.  It  presents  always  one  Supreme,  intelligent  Divinity, 
Creator  and  Ruler  of  the  world;  man's  union  with  his  Creator  as  the 
highest  immortality,  his  noblest  hope;  and  the  love  of  his  fellow  as  the 
surest  means  of  its  attainment.  In  this  Creed  blend  the  purest  religious 
seekers  evolved  by  the  human  race;  the  distinctions  between  them  are 
caused  but  by  tongue  or  name;  by  sounds  alone:  for  there  can  never  be 
more  than  one  supreme  Divinity;  more  than  one  union  therewith;  or 
more  than  one  humanity  on  this  earth,  at  least,  through  which  the  soul  of 
man  proceeds  on  its  journey  up  to  God.  Nor  is  it  impossible  to  take  a 
broader  view  of  the  subject,  and  to  find  the  same  God  always  present, 
wherever  man  lifts  his  eyes  to  some  power  other  than  that  of  earth;  to 
find  always  one  and  the  same  God  in  the  idol  of  the  savage,  the  spirit 
worship  of  the  Taoist,  the  heaven  of  Confucius,  the  hope  of  peace  for 
which  the  Buddhist  longs,  and  in  the  sects  and  dogmas  of  the  West. 
Says  a  man^  whose  knowledge  of  tongues  and  creeds  is  wide:  "What 
have  we  in  common  with  the  Turanians,  with  Chinese  and  Samoyedes? 
Very  little,  it  may  seem;  and  yet  it  is  not  very  little,  for  it  is  our  com- 
mon humanity.  It  is  not  the  yellow  skin  and  the  high  cheek-bones  that 
make  the  man.  Nay,  if  we  but  look  but  steadily  into  those  black  Chinese 
eyes,  we  shall  find  that  there,  too,  there  is  a  soul  that  responds  to  a  soul, 
and  that  the  God  whom  they  mean  is  the  same  God  whom  we  mean,  how- 
ever helpless  their  utterance,  however  imperfect  their  worship." 

The  worlds  of  Greece  and  Rome  introduce  the  subsequent  intellectual 
development  of  the  West  and  the  modern  era.  The  few  suggestions 
of  these  worlds  here  brought  together  are  but  broken  threads  leading 
into  some  of  the  most  interesting  bodies  of  intellectual  material  extant. 
If  Hellenic  thought  is  regarded  as  embracing  a  period  extending  from 
the  Homeric  writings  to  the  later  Alexandrian  philosophers;  and  the  in- 
tellectual history  of  Rome  as  extending  from  the  earliest  poets  of  the  Re- 
public to  Claudianus  or  Boethius,  practically  all  the  sources  of  inspiration 
will  be  included  to  which  the  thought  of  the  western  world  of  to-day 
may  be  traced  in  the  process  of  its  evolution.  Thus  the  names  of  Demo- 
critus,  and  Protagoras,  Parmenides,  Socrates,  Plato,  Aristotle;  of  Epi- 
curus, and  Lucretius  lead  to  many  interesting  forms  of  the  philosophic 
and  speculative  thought  of  both  the  earlier  and  later  worlds.    Inquiry 

•  Professor  Max  Muller,  Science  of  Religions,  p.  83. 


422  "  Religion  Pt.  IV 

drifts  with  them,  as  it  were,  from  Athens  to  Alexandria;  thence  to  Rome, 
and  then  northward  with  the  revival  of  learning  until  the  modern  thought 
of  the  western  Europe  of  to-day  is  reached.  Athens  seems  a  dynamic 
centre,  generating  currents  of  intellectual  activity  on  every  side.  If, 
however,  the  movements  of  these  currents  are  studied  in  greater  detail, 
the  rationalistic  thinkers  of  Greece,  from  Thales  to  Pyrrho,  lead  into  more 
or  less  distinct  streams  and  eddies,  flowing  into  the  ocean  of  modern 
science  as  the  natural  inheritance  of  the  sources  from  which  they  arise. 
Other  streams  and  channels,  springing  always  from  Athens,  flow  across 
the  Mediterranean  to  Alexandria,  another  dynamic  centre,  generating 
new  currents  and  new  streams,  with  Augustine  and  Clement,  Origin, 
Athenagoras,  Justin,  Cyril,  and  Lactantius;  presenting  another  series 
of  widening  cycles  of  intellectual  influence.  These  lead  once  more  by 
other  roads  to  Rome,  and  into  the  religious  thought  of  the  present  western 
world.  There  wiU  thus  appear  two  wide  gaps  in  the  brief  review 
just  completed;  two  gaps  presenting  influences  of  interest  and  im- 
portance not  yet  mentioned.  The  thought  necessary  to  fill  these  may 
be  separated  into  two  movements;  two  cycles  of  intellectual  influences, 
as  it  were;  one  revolving  round  the  human  Reason  as  a  centre,  the 
other  round  a  Figure  on  a  Cross. 


'Book  IV 
PHILOSOPHY 

CHAPTER  I 

PRE-SOCRATIC  THOUGHT 

Section  I  —  Introduction.  Section  II  —  The  Physicists.  Section 
III  —  The  Metaphysicians.  Section  IV  —  The  Metaphysical 
Physicists.    Section  V  —  The  Physical  Metaphysicians. 


Section  I  —  Introduction 

THE  history  of  thought,  in  relation  to  the  problems  of  existence, 
presents  two  distinct  phases:  the  theological  and  the  rational. 
Between  the  two  is  a  vaguely  defined  field  referred  to  meta- 
physics. A  philosopher  in  Plutarch  ^  says  that  to  philoso- 
phize is  "to  inquire,  to  wonder,  and  to  doubt."  But  the  fields  of 
neither  theology  nor  metaphysics  are  entirely  free  from  these  influences. 
The  theologian,  however,  refers  his  final  explanations  to  supra-rational 
and  supra-mundane  influences,  the  metaphysical  mind,  to  influences 
which  the  metaphysician  best  understands.  The  scientific  philoso- 
pher may  be  distinguished  from  these  by  one  unfailing  test;  he  rejects 
explanation  not  to  be  referred  to  the  human  Reason  itself.  That  is, 
to  that  sequence  of  ideas  called  rational,  based  upon  human  experi- 
ence, regarded  as  distinct  from  teleological,  metaphysical,  or  ultra- 
rational  influences.  Philosophy,  therefore,  as  distinguished  from 
theology  and  metaphysics,  is  the  independent  effort  of  the  human  mind 
in  search  of  truth  within  the  content  of  its  own  consciousness;  in  other 
words,  the  struggle  of  the  human  intelligence  for  self-realization  within 
itself. 

As  any  one,  more  or  less  familiar  with  modern  European  sculpture, 
strolls  for  the  first  time  through  the  galleries  of  Hellenic  marbles  in 
the  Vatican,  he  may  find  a  strangely  vivid  impression  of  having  been 

>  De  Ei,  2. 

423 


424  Philosophy  Pt.  IV 

there  before;  an  impression  which  intensifies  with  closer  examination 
of  these  beautiful  relics  of  antiquity.  If  of  the  idealistic  temperament 
he  may  refer  this  impression  to  the  reminiscence  of  some  earlier  existence 
passed  on  the  shores  of  Ionian  seas.  As  attention  is  turned  to  one 
marble  after  another,  however;  a  fountain  in  Paris,  may  be  recalled; 
a  bronze  or  a  relief  in  London,  or  some  application  of  lithic  design  in 
Berlin  or  Vienna.  This  may  lead  to  another  explanation  of  the  apparent 
familiarity  of  many  of  these  works;  in  all  likelihood  the  true  one :  namely, 
that  the  sculpture  of  the  Greeks  represents  the  culmination  of  the 
resources  of  the  art;  and  that  the  Greeks  had  discovered  and  developed 
the  majority  of  ideas  capable  of  lithic  expression,  leaving  later  sculpture 
little  choice  but  to  follow  where  they  first  had  trod.  And  so,  the  marbles 
of  the  Vatican  or  the  Acropolis  recall,  in  inverse  process,  forms  developed 
centuries  after  they  had  seen  the  light.  Thus,  as  the  philosophic  inquirer 
turns  to  one  period  after  another;  studies  the  thought  of  one  country, 
age,  or  school ;  and  compares  this  with  thought  developed  under  other 
conditions,  the  attention  constantly  reverts  to  one  period  as  the  needle 
to  the  pole. 

Early  Asiatic  and  Oriental  thought  is  chiefly  religious  or  dogmatic; 
ideas  are  arbitrarily  assumed  or  developed,  presented  in  aphoristic 
form  and  symbol,  or  clothed  with  the  sanctity  of  revelation.  Analysis 
of  the  mental  processes  through  which  the  original  assumptions  are 
formulated  and  the  sequences  derived,  is  rarely  attempted,  or  im- 
possible, owing  to  the  nature  of  the  material.  When,  however,  among 
the  mass  of  ultra-rational  symbol  and  aphorism,  certain  thought  appears, 
possessing  a  more  or  less  rational  basis,  it  has  often  a  familiar  ring  to 
the  Hellenist.  These  considerations  are  not  ^\ithout  application  to 
later  Western  inquiry;  and  whether  the  history  of  the  human  Reason, 
in  relation  to  the  problems  of  existence,  is  approached  from  the  Con- 
fucian Analects,  the  Tao  Teh  King,  the  Zenda  Vesta,  the  Upanishads, 
or  fresh  from  the  pages  of  Spencer,  Huxley,  Clifford,  Wundt,  Haeckel, 
or  the  most  modern  of  the  moderns,  as  the  thought  of  Hellas  is  studied, 
it  seems  that  all  has  been  summarized  therein  —  all  said  before  and 
all  to  be  said  by  those  to  come  after. 

Thus  it  might  seem  possible  to  a  wanderer  in  the  Vatican  to  compose 
a  history  of  no  small  portion  of  modern  sculpture  without  leaving  the 
Hellenic  galleries  at  Rome;  and  so,  to  the  student  of  Greek  thought, 
it  may  seem  that  a  by  no  means  superficial  statement  of  the  results 
of  modern  speculation  m^ight  be  suggested  without  the  presentation  of 


Bk.  IV  Pre-Socratic  Thought  425 

a  single  thought  not  first  expressed  in  that  most  articulate  tongues: 
the  speech  of  Anaxagoras  and  Democritus,  of  Socrates,  Plato  and 
Aristotle. 

These  considerations  suggest  tne  purpose  and  scope  of  the  present 
study.  It  is  undertaken  to  discover,  if  possible,  the  laws  governing 
the  action  of  the  rational  intelligence,  in  its  investigation  of  the  ulti- 
mate problems  of  existence,  and  in  order  to  formulate  the  results  pro- 
duced. 

A  study  of  rational  speculative  thought  leads  to  Greece.  In  ancient 
Hellas,  Reason  first  grows  conscious  of  itself  and  presents  the  beginnings 
of  all  later  scientific  inquiry.  Hellenic  speculation,  however,  develops 
two  fields:    Pre-Socratic  and  Post-Socratic  thought. 

There  are  three  sources  upon  which  an  analysis  of  the  former  may  be 
based,  owing  to  the  almost  total  disappearance  of  the  original  works. 
These  sources  are:  first,  the  fragments,  or  direct  quotations,  of  the 
earliest  thinkers;  second,  historical  reviews  or  notices  of  their  opinions; 
third,  passages  cited  or  summarized  in  controversy.  The  first  of  these 
though  slight,  is  vastly  the  most  important.  The  second  is  larger  and 
of  value  in  throwing  light  upon  the  subject;  this  information,  however, 
is  one  degree  removed  from  the  fountain-head;  and  its  value,  as  re- 
flected through  another  mind,  is  dependent  upon  the  ability  of  the 
compiler  to  understand  the  material  with  which  he  deals.  The  works 
of  Aristotle  form  a  source  of  this  nature  more  valuable  many  times  over, 
than  all  others  combined;  owing  to  his  faultless  comprehension  of  the 
positions  stated,  and  his  invariable  seizure  of  the  essentials  involved. 
Laertius,  Plutarch,  Stobaeus,  Simplicius,  Theophrastus,  and  Sextus 
Empiricus  have  preserved  important  information  of  this  kind. 

The  third  class  represents  citation  or  commentary  used  in  controversy. 
The  works  of  Aristotle  are  again,  as  ever,  the  most  valuable  mine  in 
which  such  citation  may  be  found;  it  is,  however,  except  when  used  by 
Aristotle,  two  degrees  removed  from  its  ultimate  inspiration  and  cor- 
respondingly less  valuable.  Some  of  the  writers  mentioned  present 
information  of  this  nature;  the  larger  portion,  however,  is  found  in 
the  works  of  Plato,  the  Alexandrine  commentators  and  metaphysicians, 
in  the  patristic  wTitings,  and  in  certain  Roman  studies  and  reviews. 
Information  derived  from  this  third  class  of  comment  and  controversy 
should  be  used  with  caution,  and  —  always  with  the  exception  of 
Aristotle  —  in  many  cases  is  not  only  redundant,  but  misleading, 
owing  to  confused  thought  and  the  polemical  attitude  adopted.    The 


426  Philosophy  Pt.  IV 

material  dealing  with  the  subject,  as  in  theological  literature,  increases 
in  volume  as  it  recedes  from  the  original  inspiration,  and  decreases 
in  value  inversely  as  its  bulk. 

Thus  the  history  of  the  human  Reason  leads  to  Greece  and  Pre-So- 
cratic  thought,  and  an  enormous  cone,  or  pyramid,  of  investigation 
and  commentary,  referring  to  the  few  fragments  representing  the  apex 
of  the  pyramid;  the  base  of  which  is  formed  by  the  constantly  widening 
area  of  history  and  comment  of  succeeding  ages.  In  order  to  reduce 
the  subject  to  its  simplest  terms,  the  original  sources  are  presented  and 
reference  is  largely  limited  to  Aristotle. 

Section  II  —  The  Physicists 
Article  i  —  T hales. 

The  pendulum  of  inquiry,  in  search  of  the  beginnings  of  rational 
thought,  after  various  oscillations  from  east  to  west,  sooner  or  later 
comes  to  rest  at  a  point  in  Asia  Minor  near  the  mouth  of  the  Maeander; 
for  there,  in  the  town  of  Miletus,  it  seems,  were  born  Thales,  Anaximan- 
der  and  Anaximenes,  to  whom  may  be  traced  the  origins  of  the  rational 
history  of  man.  The  intelligence  there  first  grows  conscious  of  itself 
in  relation  to  the  universe;  it  there  opens  its  eyes  as  a  child,  as  it  were, 
in  an  all-enveloping  Cosmos  of  inexplicable  phenomena,  and  asks 
perhaps  the  first  and  most  natural  question :  What  is  it?  Pure  reason, 
basing  its  inquiries  upon  impressions  of  nature  derived  through  the 
senses,  can  act  in  but  one  way:  it  must  concern  itself  with  the  resem- 
blances of  things;  it  can  alone  classify  phenomena  by  means  of  that 
which  they  possess  in  common;  these  classifications  within  wider  gener- 
alizcvtions,  and  so  on.  When  the  reason,  based  upon  contact  with 
nature  through  the  media  of  sense,  ceases  to  do  this,  it  ceases  to  act; 
it  can  do  nothing  else.  Thus,  when  the  reason  begins  to  move  with 
Thales,  it  can  do  but  one  thing:  the  mind  is  conscious  through  the  senses 
of  something  external  to  it;  this  something  is  the  objective,  sensible 
universe,  and  the  mind  naively  asks:  What  is  it?  The  answer  to  this 
question,  in  the  then  existing  condition  of  knowledge,  can  take  but  one 
rational  form:  it  must  seek  to  classify  different  material  phenomena 
within  one  general  conception,  or  material  element,  common  to  all. 

The  question,  therefore,  "What  is  it?"  with  reference  to  the  universe, 
resolves  itself  into  the  question:  What  is  the  element  common  to  the 
external  phenomena  with  which  the  senses  come  in  contact?    Their 


Bk.  IV  Pre-Socratic  Thought  427 

principle,  said  Thales^  their  element,  that  of  the  nature  of  which  they 
all  partake,  is  water;  and  Thales,  instead  of  referring  this  opinion  to 
divine  inspiration,  or  analogous  sources  of  information,  supported 
it  with  his  own  reasons  derived  from  the  observation  of  nature.  This 
is  why  all  rational  thought  begins  with  this  memorable  man.  The 
conception  that  "all  things"  might  be  reduced  to  a  single  ultimate 
principle,  or  element,  based  upon  rational  explanation  and  the  direct 
observation  of  nature,  proves  him  to  have  been  one  of  the  few  creative 
intellects  of  the  world,  the  first  philosopher;  and,  as  Anaximenes,^  in  a 
letter  to  Pythagoras,  well  says:  "To  Thales  must  be  attributed  the 
beginnings  of  all  wisdom." 

Aristotle^  says  that  his  reasons  for  this  position  were  doubtless  derived 
from  observing  that  "all  forms  of  nourishment  are  more  or  less  moist; 
that  heat  is  generated  from  moisture  and  the  vital  functions  continued 
through  it,  as  the  first  principle  of  things  is  that  from  which  they  arise. 
Again,  from  the  facts  that  the  seeds,  or  germs,  to  which  the  growth  of 
things  may  be  traced  are  moist,  and  that  water  is  naturally  the  prin- 
ciple, or  element,  of  moisture."  Water,  therefore,  said  Thales,  may 
apparently  be  regarded  as  the  original  or  elemental  substance,  from 
the  various  modifications  of  which  other  phenomena  are  derived. 

Article  2 — Anaximenes. 

If  all  things  are  resolvable  into  a  single  primitive  substance,  the  next 
object  of  inquiry  will  be  the  process  of  modification.  If  there  is  such 
a  thing  as  an  element  common  to  all  things,  in  accordance  with  what 
principle  or  principles  will  it  undergo  change?  What  is  the  process 
governing  modifications?  This  is  the  next  question  to  which  turned 
the  minds  of  thinking  men,  and  philosophy  enters  upon  its  history. 

It  was  doubtless  observed  that  water,  under  certain  conditions, 
becomes  a  solid  of  greater  or  less  density;  and  under  others,  a  vapour 
of  varying  degrees  of  rarity.  It  seems  reasonable,  therefore,  to  believe 
that  change  in  the  primitive  element  occurs  through  a  process  of  con- 
densation and  rarefaction.  But,  if  this  is  the  process  governing  modi- 
fication, it  seems  that  the  primitive  substance  itself  must  be  sought  in 
that  element  which  is  common  to  all  things  modified.  Thus,  in  the  series 
of  changes  presented  by  water,  as  it  turns  from  a  solid  into  vapour 


'  Aristotle.  Metaph.  A.  3.,  983  b  2a 
'  Laertius.     LI.  2.,  p.  34. 
»  Ibid. 


428  Philosophy  Pt.  IV 

through  liquefaction,  it  seems  evident  that  the  substance  common 
to  these  variations  is  not  the  water  but  the  vapour.  The  rarest  sub- 
stance, therefore,  must  be  that  of  the  nature  of  which  others  partake. 
The  element  of  other  substances  and  its  greater  relative  contraction, 
will  produce  the  denser  phenomena.  The  vapour  into  which  water 
expands,  presents  varying  degrees  of  density,  until  it  disappears  en- 
tirely, through  mingling  with  the  surrounding  atmosphere.  What, 
therefore,  more  reasonable  than  to  regard  this  atmosphere  itself,  or 
air  in  general,  as  the  primitive  substance  from  which  all  changeable 
phenomena  are  derived  through  a  process  of  condensation  and  rare- 
faction? If  this  position  is  adopted,  it  becomes  essential  to  abandon 
the  position  of  Thales,  and  regard  air,  or  the  surrounding  ether,  as 
the  elemental  substance.  In  reaching  this  position,  philosophy  has 
taken  its  first  definite  step  in  advance. 

Expansion  and  contraction,  at  this  point  then,  are  regarded  as  the 
process  of  modification;  and  air,  or  the  rarest  ether,  as  the  primitive 
substance  modified.  This  is  the  position  reached  by  Anaximenes. 
The  most  important  passages  in  which  it  is  formulated  are  to  be  found 
in  Simplicius^  and  Plutarch: 2 

Anaximenes  ....  is  of  the  opinion  that  the  essential  nature 
of  things  is  one  and  infinite;  holding  it  however,  to  be  determinate, 
rather  than  indeterminate,  and  regarding  it  as  air.  This  air,  or  primi- 
tive substance,  he  believes,  will  vary  in  its  relative  density  and  rarity, 
consistent  with  the  nature  of  different  things;  thus,  when  very  rarefied, 
it  becomes  fire;  when  less  so  it  is  reduced  to  winds,  clouds,  and  waters; 
with  increasing  contraction  becoming  earth,  stone,  and  all  other 
things. 

Anaximenes  ....  says  that  air  is  the  principle  of  all  existences ; 
that  from  it,  is  everything  evolved;  and  into  it,  eventually  disappears. 
As  the  soul  which  controls  and  constitutes  our  own  existence  is  nothing 
but  air;  so,  that,  within  which  the  whole  world  is  held  and  enveloped 
is  but  air  and  spirit. 

Article  5  —  Diogenes  of  ApoUonia. 

-  Anaximenes  sought  a  more  definite  conception  of  the  primitive  sub- 
stance than  Thales,  and  attempted  to  develop  a  method  of  accounting 

>  Simpl.  Phys.  24,  26,  (TfaeopLr.)  Dicl's  Vorsokratiker,  Vol.  I.,  p.  18. 
«  De  Placilis  Philosopk.  I.,  3,  4.     Ibid.,  p.  21. 


Bk.  IV  Pre-Socratic  Thought  429 

for  its  modifications.  The  subject,  however,  may  be  carried  a  step 
farther;  for  if  there  is  a  primitive  element  of  all  things,  and  air  is 
that  element,  it  naturally  becomes  necessary  to  determine  as  far  as 
possible  its  essential  characteristics.  Diogenes  of  Apollonia  devel- 
ops the  thought  of  Anaximenes.  First,  he  said,  the  primitive  sub- 
stance must  not  only  be  one  which  is  common  to  all  things,  and 
capable  of  entering  into  all  things;  but,  second,  it  must  be  capable 
of  thought.  The  fragments  in  which  this  position  is  established 
are  found  in  Simplicius,  in  his  commentary  upon  the  Physics  of 
Aristotle.  In  these,  Diogenes  expresses  the  next  development  of 
thought  as  follows:^ 

2, 
It  seems  to  me,  if  we  regard  the  universe  as  composed  of  all  existent 
things,  that  it  must  bring  about  the  changes  of  these  through  itself; 
and  at  the  same  time  remain  essentially  unaltered.  For,  if  there  were 
elementally  distinct  things  in  the  w^orld,  such  as  earth,  water,  and  others 
which  appear  to  the  senses;  and  if  these  were  essentially  and  individually 
distinct  from  each  other,  never  changed  their  nature,  and  were  not 
susceptible  to  alteration,  they  would  be  incapable  of  blending  with 
other  things,  of  receiving  nourishment  and  increase  from  them,  or 
of  causing  their  disintegration.  Vegetable  life  would  not  be  generated 
from  the  earth;  animals  and  other  things  would  not  be  reproduced, 
if  there  were  no  common  element  in  them.  But  all  these  things  have 
a  common  origin ;  they  take  different  forms  at  different  times  and  return 
to  their  origin  once  more. 

4. 

As  men  and  other  animals  derive  their  life  from  the  air  they 
breathe,  and  consequently,  their  soul  and  intelligence;  and  as, 
when  they  cease  to  breathe  the  air,  life  and  thought  leave  them 
as  well;  there  seem  excellent  reasons  for  belie\ing  that  men 
and  animals  derive  their  life,  souls,  and  intelligence  from  the  air  they 
absorb. 

3- 
Without  intelligence,  things  could  not  be  systematically  distributed 
as  they  are;  for  all  things  bear  definite  relations  to  each  other:  summer 
and  winter,  night  and  day,  rain,  wind  and  good  weather;  and,  if  one 
reflects  upon  these  and  other  relations,  one  finds  they  are  arranged 
with  purpose  and  harmony. 

>  The  numbers  preceding  the  citation  are  those  of  Diel's  Vorsokratiker. 


430  Philosophy  Pt.  IV 

5- 
And  so,  it  seems  to  me,  that  what  we  call  air  must  possess  thought 
and  consciousness;  and  that  it  must  preside  over  and  control  everything; 
and  so  I  believe  that  thought  is  derived  from  air,  and  that  it  arranges, 
is  blended  with,  and  penetrates  into  all  things;  and  that  nothing  exists 
which  does  not  partake  of  the  nature  of  air. 

Diogenes  of  Apollonia  represents  an  interesting  position  in  early 
thought:  the  culmination  of  inquiry,  developed  from  the  original 
hypothesis  of  Thales  that  ''all  things"  could  be  resolved  into  a  primitive 
substance.  The  definite  conclusion  is  here  reached,  if  there  is  an  elemen- 
tal substance,  that  there  can  be  no  such  thing  as  generation,  properly 
speaking,  but  that  all  change  must  be  referred  to  modifications  of 
existing  substance. 

As  Erdmann^  says:  "Diogenes  denies  consciously  what  his  pred- 
ecessors had  denied  unconsciously,  viz.,  the  existence  of  the  immaterial. 
Not  only  does  he  expressly  call  his  original  substance,  of  which  all  things 
are  modifications,  a  awjia,  but  he  already  knows  that  a  distinction  is 
made  between  matter  and  spirit,  and  it  is  evidently  in  opposition  to  such 
a  dualism  that  he  maintains  that  reason,  which  to  him  is  identical  with 
vitality  and  feeling,  is  imminent  in  the  air  and  unthinkable  without  it. 
Hence  everything,  even  inorganic  existences,  and  especially  man, 
receives  life  and  knowledge  by  breathing.  Physiological  examples, 
e.g.,  the  foamlike  nature  of  seeds,  are  intended  to  prove  the  life-giving 
nature  of  the  air.  This  attempt  to  maintain  the  earlier  Monism  against 
Dualism  makes  the  naive  hylozoism  into  a  materialistic  doctrine." 
yA  consistently  materialistic  explanation  of  the  phenomena  of  nature 
is  here  presented  for  the  first  time;  "all  things"  at  this  juncture  are 
reduced  to  a  single  primitive  matter,  or  substance,  which  partakes  of 
the  nature  of  all  changeable  things,  and  which,  itself,  is  vitalized  air, 
or  ether.  This,  then,  seems  to  be  the  essential  element,  or  principle 
of  things,  and  the  process  representing  the  rarefaction  and  condensation 
of  this  primitive  substance  will  represent  the  principle  of  modification. 
As  the  condensation  and  rarefaction  of  air  is  carried  on  through  its 
absorption,  reduction  and  exhalation,  the  process  of  breathing,  or  the 
process  of  expansion  and  contraction  of  air,  is  the  explanation  of  change. 

In  the  then  existing  condition  of  knowledge,  the  hypothesis  of  Thales 
is  incapable  of  further  development;  an  ultimate  single  substance, 

» Eislory  of  Philosophy.    English  translation  edited  by  Prof.  W.  S.  Hough.  Vol.  I.,  p.  25. 


Bk.  IV  Pre-Socratic  Thought  431 

presenting  no  possibility  of  further  analysis,  is  reached,  together  with  a 
theory  apparently  explaining  the  features  of  modification.  The  movement 
of  thought  in  this  direction  is  arrested;  on  reaching  Diogenes  of  ApoUonia 
it  reaches  the  limits  of  the  possible  development  of  the  original  con- 
ception of  Thales  that  the  Cosmos  could  be  resolved  into  a  single  primi- 
tive element.  An  island,  so  to  speak,  appears  in  the  ocean  of  thought: 
an  island  discovered  by  Anaximenes  and  Diogenes.  The  thinker 
must  either  stay  with  them  and  accept  their  conclusions,  or  go  completely 
back  to  the  starting-point  and  begin  again.  The  reason  he  must  go 
back  to  the  beginning  is  that  the  hypothesis  of  speculation  is  exhausted 
on  reaching  this  island  of  Diogenes.  Thales  began  with  the  assumption 
that  all  things  might  be  resolved  into  a  primitive  element.  This  element, 
when  reduced  to  vitalized  ether,  is  not  susceptible  to  further  develop- 
ment; its  changes  may  apparently  be  explained  by  a  process  of  conden- 
sation and  rarefaction  —  and  the  movement  of  thought  ceases.  Reason 
begins  its  history  by  positing  an  ultimate  material  principle  of  things; 
it  reduces  this  to  its  final  analysis,  and  stops;  it  can  go  no  farther.  Di- 
ogenes of  Apollina  may,  therefore,  be  left  upon  this  island  of  \dtalized 
ether. 

Thought,  in  continuing  its  quest,  must  go  back  to  the  beginning, 
make  a  circle^  so  to  speak,  and  start  once  more.  This  is  what  might 
be  called  the  first  cycle  of  purely  physiological  thought.  It  is  known 
as  the  Ionic  school,  extending  from  Thales  to  Diogenes  of  ApoUinia; 
approximately  from  the  35th  Olympiad  to  the  80th  Olympiad;  from 
640  B.  C.  to  460  B.  C. 

Section  III  —  The  Metaphysicians 
Article  1 — Anaximander. 

The  rational  intelligence  may  adopt  two  methods  of  reaching  ex- 
planation: it  may  analyze  and  classify  particular  phenomena  in  order 
to  establish  a  general  conception;  or,  it  may  adopt  a  general  conception 
and  test  it  through  comparison  with  particular  phenomena.  The 
two  methods,  although  leading  to  identical  results,  represent  two  dis- 
tinct attitudes  at  the  starting-point. 

The  philosophic  investigator,  disinclined  to  accept  vitalized  ether 
and  its  process  of  modification  established  by  Diogenes  as  the  final 
solution  of  the  Cosmos,  will  begin  to  look  about  for  another  hypotheti- 
cal conception  upon  which  to  base  further  inquiry.    In  going  back  to 


432  Philosophy  Pt.  IV 

the  starting-point  at  Miletus,  in  search  of  such  a  conception,  he  finds 
another  philosopher,  Anaximander,  the  younger  friend  and  associate 
of  Thales,  who  supplies  the  desired  hypothesis  and  suggests  a  new  method 
with  which  to  approach  philosophic  investigation.  Anaximander 
says  that  "all  things"  cannot  be  resolved  into  a  primitive  substance, 
as  Thales  supposed;  but,  on  the  contrary,  all  things  are  derived  from 
a  pre-existing  infinity  which  originally  contained  them  within  itself. 
A  first  principle  cannot,  therefore,  be  derived  from  particular  things, 
because  particular  things  are  derived  from  a  first  principle.  Within 
such  a  first  principle,  or  infinite  combination,  says  Anaximander,* 
all  things  exist  and  are  derived  from  it.  "For,"  as  Aristotle  says,^ 
referring  to  Anaximander,  "all  things  are  either  a  first  principle  or 
derived  from  a  first  principle.  There  can  be  no  first  cause,  or  principle 
of  the  infinite,  for  it  would  then  be  limited.  Beside  which,  that  which  is  a 
first  principle  must  be  ungenerated  and  unchangeable,  for  all  things 
changeable  and  generated  must  have  an  end.  .  .  .  There  can, 
therefore,  be  no  first  principle  of  the  infinite;  changeable  things,  on 
the  contrary,  being  derived  from  the  first  principle  itself.  This 
infinite  first  principle  then  contains  and  controls  all  things.  .  .  . 
It  is  in  its  nature  divine,  changeless,  and  immortal." 

When  this  conception  of  Anaximander  is  grasped,  it  appears  that 
change  may  be  regarded  as  caused,  not  by  modification  of  the  primitive 
substance,  as  the  lonians  supposed,  but  through  a  process  of  separation 
from  it.' 

This  is  a  method  of  inquiry  different  from  that  adopted  by  the  lonians. 
Anaximander  seems  to  have  been  the  first  thinker  to  suggest  it,  and 
through  it  will  further  progress  proceed.  The  most  important  notice 
of  Anaximander  is  that  of  Theophrastas:^  "Anaximander  regarded 
the  first  principle  and  element  of  things  as  infinite,  and  was  the  first 
to  use  that  word  in  connexion  with  a  principle.  He  said  that  it  was 
neither  water  nor  any  of  the  other  things  usually  called  elements,  but 
that  the  infinite  was  something  of  a  different  nature  from  these,  and 
that  from  it  proceeded  the  heavens  and  the  worlds;  and  things  at  their 
dissolution  must  of  necessity  return  to  that  from  which  they  are 
evolved.  .  .  .  Doubtless,  perceiving  the  four  elements  changing 
into  each  other,  he  does  not  wish  to  make  any  one  of  these  the  primitive 

•  Aristotle  Metaph.  A.  2.,  1069  b  22. 

*  Aristotle  Phys.  V.  4.,  203  b.  6. 

•  Ibid.,  A.  4.,  187  a  ao. 

*  Diel's  VoTsokratiker.     Vol.  1.,  9,  p.  13. 


Bk.  IV  Pre-Socratic  Thought  433 

substance,  but  chooses  rather  to  adopt  something  other  than  any  of 
these.  And  he  does  not  think  that  the  modifications  of  sensible  pheno- 
mena are  caused  by  changes  in  the  elemental  substance,  but  by  the 
separation  of  opposites  caused  by  eternal  motion." 

The  primitive  substance,  or  potential  "  mixture,"  as  Aristotle  would 
call  it,  is  here  regarded  as  consisting  of  an  infinite  homogeneous  unity 
from  which  all  variable  things  proceed  and  into  which  they  are  ab- 
sorbed. The  process  of  change,  then,  is  no  longer  condensation  and 
rarefaction,  but  separation.  The  next  question  in  inquiry  will  be:  What 
governs  the  separation  of  particular,  measurable  things  from  the  infinite, 
immeasurable  imity? 

Article  2 — Pythagoras. 

The  infinite  unity  of  Anaximander  is  incapable  of  being  changed  or 
measured,  but  everything  else,  being  derived  from  it,  is  corruptible  and 
finite;  that  is  changeable  and  measurable.  It  is  obvious  that  neither 
separation,  change,  nor  measure  can  occur,  except  through  the  establish- 
ment of  difference;  that  is,  through  the  determination  of  more  or  less. 
If  the  infinite  of  Anaximander  is  regarded  as  an  absolute,  unlimited 
unity,  and  all  other  things  are  derived  from  it,  it  seems  that  this  unity 
must  be  greater  than  all  other  things.  But,  again,  the  multiplicity 
of  things  derived  from  unity  must  bear  relations  within  itself,  as  well 
as  to  the  original  unity.  But  these  relations,  involving  as  they  must 
the  establishment  of  more  or  less,  can  only  occur  through  the  media  of 
quantitative  distinctions.  It  seems,  at  the  same  time,  that  quantitative 
distinctions,  in  order  to  obtain  exact  formulation,  must  be  capable  of 
being  determined  through  the  relations  of  definite  mathematical,  or 
numerical,  conceptions.  But,  if  things  differ  essentially  as  more  or 
less,  and  differences  of  more  or  less  are  fundamentally  distinctions 
of  number,  it  seems  reasonable  to  believe  that  essential  differences 
and  numerical  differences  must  be  identical;  in  other  words,  that 
number  and  essence  are  the  same.  The  suggestive  speculative  con- 
ception underl>nng  the  Pythagorean  systems  is  here  reached. 
This  conception  in  its  most  abstract  form  presents  the  Cosmos, 
or  sum  of  things,  as  an  unchangeable,  unlimited  unity  from  which 
changeable,  limited  things  are  derived,  in  harmony  with  an  estab- 
lished system  of  numerical  relations.  This  is  the  fundamental 
speculative  thought  of  Pythagoras.    In  the  words  of  Aristotle,  ^  it  may 

'  Aristotle  Uetafh.  A.  $.  986  «  t. 


434  Philosophy  Pt.  IV 

be  expressed  in  the  position  which  regards  "the  element  of  numbers  as 
the  element  of  things." 

The  lonians  reasoned  through  sense  perception  of  matter;  they  reduced 
matter  to  its  simplest  element  and  denied  the  existence  of  the  incor- 
poreal as  the  necessary  culmination  of  their  school.  Pythagoras,  in 
developing  the  thought  of  Anaximander,  rather  than  that  of  Thales, 
looks  at  nature  from  a  different  point  of  view.  He  seeks  not  the  element 
of  the  substance  modified,  but  the  principles  of  governing  modification. 
In  developing  this  hypothesis,  Pythagoras  formulates  an  ideal,  rather 
than  a  corporeal  principle,  and  suggests  a  method  of  inquiry  based 
upon  the  conception  of  mathematical  relations,  as  principles  governing 
existence.  He  thus  lays  the  foundation  of  later  idealistic  systems,  and 
was  perhaps  the  first  pure  metaphysician  after  Anaximander.  With 
him  speculation  advances  into  unexplored  seas  full  of  hope  and  with 
abundant  material;  in  other  words,  with  a  new  and  unexhausted  hypothe- 
sis: the  hypothesis  of  the  solubility  of  phenomena  in  the  crucible  of 
mathematical  relations. 

Two  methods  of  inquiry  are  thus  developed  at  the  outset  of  cosmo- 
logical  speculation:  the  inductive  and  the  deductive.  The  first  devotes 
attention  to  the  study  of  nature  in  the  observation  of  particular  phe- 
nomena through  the  media  of  sense  impressions.  These  impressions  are 
analyzed  and  classified  in  relation  to  each  other,  and  general  conceptions 
evolved.  The  second  method  begins  with  the  formulation  of  a  general 
conception,  and  derives  its  classification  of  particular  phenomena  from 
it.  The  first  leads  to  an  analysis  of  matter;  the  second  to  an  analysis 
of  ideas.  There  are  two  important  conceptions  in  rational  speculation 
traceable  to  Pythagoras:  First,  the  idea  that  number,  and  the  essence 
of  things,  are  indentical.^  Second,  that  sensible  bodies  might  be 
resolvable  into  four  elemental  substances:  fire,  water,  earth,  and  air.^ 

The  mind  which  begins  to  construct  the  heavens  out  of  numbers,  as 
Aristotle^  would  say,  with  the  Pythagoreans,  or,  in  other  words,  to 
speculate  upon  the  hypothesis  of  the  solubility  of  cosmical  problems 
in  a  mathematical  crucible,  will  soon  find  itself  involved  in  questions 
dealing  with  abstract  distinctions  between  things  and  symbols  of  things, 
between  quantitative  and  qualitative  categories.  As  numerical  and 
mathematical  relations  are  infinite,  and  as  these  infinites  themselves 


*  Aristotle,  Ibid. 

*  Lairtius  VIII. ,  iq,  p.  aio. 

*  De  Codo,  V.  I.,  300  a  15. 


Bk.  IV  Pre-Socratic  Thought  435 

are  infinitely  varied  in  nature,  when  they  are  applied  to  such  abstrac- 
tions as  Truth,  Being,  God,  Nature,  Reality,  the  One  and  the  Many,  a 
limitless  maze  of  mystical  and  metaphysical  speculation  is  opened  for 
investigation.  Pythagoreanism  is  essentially  mystic,  confused  and  com- 
plex, and  as  such  achieves  the  negation  of  philosophy.  The  object  of 
philosophy  is  realization;  the  moment  any  system  opens  a  limitless 
infinity,  philosophy  ceases;  for  there  can  be  no  definite  realization  in 
infinity. 

In  the  contemplation  of  the  Pythagorean  hypothesis,  the  mind  is 
drawn  to  one  phase  of  inquiry:  the  ultimate  inquiry  in  this  connexion, 
that  with  reference  to  the  relation  between  the  One  and  the  Many; 
between  the  unity  from  which  things  proceed  and  the  multiplicity  of 
things  derived.  This  is  the  point  in  the  Pythagorean  position  upon 
which  discussion  concentrates,  and  from  which  philosophic  movement 
is  generated. 

The  rational  intellect,  in  beginning  to  speculate  with  Anaximander, 
finds  itself  drawn  to  the  thought  of  Pythagoras  in  search  of  the  explana- 
tion of  the  phenomena  of  change.  On  meeting  Pythagoras,  it  turns 
to  the  study  of  an  abstract  unity  on  one  hand,  and  to  the  concrete 
multiplicity  derived  from  this  on  another.  If,  then,  it  begins  to  study 
this  infinity,  and  adopts  mathematical  principles  as  the  only  means  of 
submitting  it  to  an  exact  analysis,  it  but  opens  up  other  infinities,  and 
the  process  perpetuates  itself  indefinitely.  Pythagoreanism  is  an  end- 
less series  of  self -perpetuating  numerical  categories;  it  can,  conse- 
quently, present  no  possibility  of  self-realization  to  the  finite  mind 
which  understands  it.  The  finite,  rational  intellect,  therefore,  at  this 
juncture  has  no  choice  but  to  reject  the  categories  altogether,  and 
turn  attention  to  the  ultimate  unity:  in  the  speculative  language  of 
the  day,  to  repudiate  the  "Many"  and  seize  upon  the  "One."  This 
is  the  next  progressive  and  necessary  step  in  rational  thought,  and  is 
taken  by  Xenophanes.  Aristotle^  says  that  he  was  the  first  thinker 
to  introduce  unity  in  thought. 

Article  j  —  Xenophanes. 

The  mind  which  rejects  the  Many  and  recognizes  but  absolute  Unity 
frees  itself  at  a  stroke  from  difficulties  arising  from  speculative  concep- 
tions of  plurality;  from  all  the  mystic  and  symbolic  logicalities  and 
illogicalities   of   Pythagoreanism.      This   position   adopted,   however, 

'  Mttaph.  A.  s-  986  b  Ji. 


436  Philosophy  Pt.  IV 

the  attention  is  drawn  to  the  necessity  of  establishing  more  definite 
conceptions  with  reference  to  the  nature  of  this  Unity,  or  the  "One." 
How  may  the  One  be  known?  How  may  the  human  reason  come  in 
contact  with  it?  What  is  it?  These  are  the  questions  Xenophanes 
wiU  be  expected  to  answer.     He  saysi^ 

The  absolute  Being,  the  One,  is  not  generated.  Generation  can 
occur  only  from  that  which  is  like  or  unlike;  but  the  generation  of  the 
absolute  can  take  place  from  neither  one  nor  the  other;  not  from  like, 
for  such  a  supposition  would  be  the  negation  of  the  absolute,  in  the 
implication  of  relations  to  others  of  the  same  nature;  not  from  unlike, 
for  things  can  but  generate  their  own  kind.  As  absolute  Being,  or 
Unity,  therefore,  is  ungenerated,  it  must  be  eternal.  Eternal  but  neither 
infinite  or  finite:  not  infinite,  for  infinity  implies  a  negation  of  deter- 
minate existence;  not  finite,  for  that  involves  measure  and  plurality. 
Neither  is  it  movable  nor  immovable:  not  the  first,  for  it  would  then  be 
divisible ;  not  the  second,  for  that  involves  a  quality  of  non-existence. 

Xenophanes  possessed  one  of  the  most  interesting  intellects  of  early 
Greek  thought,  but  came  perilously  near  being  a  theologian;  it  is  indeed 
not  always  easy  to  trace  the  purely  philosophic  element  in  his  specu- 
lation; his  Unity  may  seem  a  pantheistic  divinity.  Aristotle^  says 
that  he  looked  up  to  the  whole  heavens  and  called  them  God.  Such 
a  position,  however,  in  philosophy,  requires  more  exact  determination 
than  the  negatives  cited:  but  when  Xenophanes  is  asked  for  further 
definition  of  his  position  he  is  lent  the  following  words: 

Surely  never  hath  been,  nor  e'en  ever  will  be  a  mortal 
Knowing  the  Gods,  and  the  nature  of  things  of  which  I  am  speaking; 
For  though  we  chance  on  the  truth,  we  do  so  unheeding,  unknowing: 
Nought  but  opinion  there  is,  all  things  in  its  error  enfolding.* 

These  lines  show  the  first  germ  of  conscious  doubt  in  philosophy, 
and  the  first  recognition  of  a  philosophic  distinction  between  truth 
and  human  opinion.  Up  to  this  point  the  reason  proceeds  upon  the 
tacit  assumptions  of  the  existence  of  an  ultimate,  objective  truth, 
and  that  sense  and  rational  deliberation  were  trustworthy  guides  to 

•  This  passage  is  »  briel  summary  of  the  speoilative  essentials  of  the  opinions  attributed  to  Xenophanes 
in  the  Aristotelian  work,  De  Xenophane,  etc.  (III.  977),  aad  io  Simplidus  (Pbyt.,  it,  9tS-  Piels,  Vot» 
I ,  P-  40). 

'  Metaph.  A.  5.  986  b  24. 

'  Sextus  Empiricus,  Adv.  Math.  VII.,  49  and  no. 


Bk.  IV  Pre-Socratic  Thought  437 

its  discovery.  Xenophanes,  after  his  experiences  with  the  abstract 
complexities  of  Pythagorean  metaphysics,  frees  himself  from  these 
by  the  denial  of  the  complex  and  the  recognition  of  the  one  absolute 
existence  alone.  When  questioned,  however,  with  reference  to  the 
nature  of  this  absolute,  or  true  Being,  he  merely  presents  a  few  negations; 
and,  upon  further  inquiry,  begins  to  doubt.  He  doubts,  but  unsystemat- 
ically,  unscientifically,  as  it  were;  and  notwithstanding  ancient  texts 
to  the  contrary,  there  is  no  trace  of  a  rationalized  skepticism  to  be 
found  in  his  words.  ^  Philosophy  must  obviously  move  on  without 
him,  and  seek  another  leader  to  answer  these  questions. 

Article  4 — Parmenides. 

Absolute  Being,  devoid  of  change,  the  One,  divested  of  plurality, 
necessarily  implies  something  distinct  from  change  and  multiplicity. 
If  the  One  is  absolute  and  without  relation,  if  there  is  such  a  thing  as 
an  ultimate,  objective  Being,  Truth,  or  Reality,  there  should  be  some 
rational  method  of  distinguishing  between  the  absolute  and  the  relative; 
between  the  existent  and  the  non-existent  —  between  Being  and  Be- 
coming, in  the  phraseology  of  the  period.  The  next  step,  therefore, 
must  be  to  determine  the  essential  difference  between  Truth,  or  true 
Being,  and  that  which  is  but  opinion.  Aristotle^  says  that  Parmenides 
was  said  to  be  the  pupil  of  Xenophanes;  and  the  pupil  naturally  repre- 
sents the  development  of  this  phase  of  thought.  Aristotle^  says  he 
formulated  two  distinct  conceptions  with  reference  to  Being  and  Be- 
coming. He  regarded  Truth,  or  real  Being,  as  the  only  genuine  exist- 
ence; but,  compelled  to  recognize  the  impressions  derived  from  variable 
phenomena,  he  referred  Truth  to  the  decisions  of  the  deliberative 
reason;  other  phenomena  to  mere  sense  impressions.  Thus  Truth,  or 
the  Absolute,  may  be  approached  through  the  action  of  the  reason 
alone;  all  else  must  be  regarded  as  mere  opinion,  or  rather  as  non-existent. 
The  following  are  the  most  important  records  of  the  thought  of  Par- 
menides in  relation  to  earlier  and  later  speculation: 

4-5- 
"Come,  the  two  paths  I  will  show  thee  and  well  listen  thou  to  my  saying; 
These  are  the  paths  which  alone  will  aid  thee  in  search  of  true  knowledge: 
First,  that  true  Being  exists,  and  impossible  that  it  should  not  be. 

'  M.  Victor  Cousin  presents  an  interesting  review  of  the  question,  Fragmenli  Philosophiques  iPhilosophii 
AneUntu),  p.  77. 

'  Metaph.  A.  5,  986  b  22. 
•  Ibid. 


438  Philosophy  Pt.  IV 

This  is  the  trustworthy  path,  for  truthfuhiess  ever  attends  it. 
Second,  Non-Being  is  not;  and  that  it  must  be  non-existent. 
This  is  the  path  I  would  say  of  which  thou  must  ever  know  nothing. 
That  which  is  not  is  unknown  and  thou  canst  not  tell  its  existence. 
For  the  same  thing  is  the  thought  with  that  which  can  come  into  Being. 

6. 
Being  is,  we  must  say,  and  saying  it,  e'en  must  believe  it. 
Possible  is  it  to  be;  but  not  to  be  means  no  existence. 
Non-Being,  therefore,  is  not;  and  this  then  I  bid  thee  to  ponder. 
First,  from  this  path  would  I  lead  thee,  again  from  that  other  moreover; 
Doubly  involved  and  confusing,  where  mortals  in  ignorance  wander, 
Helplessness  guiding  alone  the  wavering  thoughts  they  have  in  them; 
Borne  along  dumbly  and  blindly,  a  swarm  of  unreasoning  creatures; 
Thinking  non-Being  the  same,  yet  not  the  same,  is  as  true  Being; 
And  that  all  things  are  involved  in  paths  of  their  own  contradiction. 

The  actual  non-existence  of  that  which  may  be  referred  to  opinion, 
derived  from  mere  sense  impression,  and  the  necessary  existence  of 
all  derived  from  deliberative  reason,  is  the  key  to  the  thought  of  Par- 
menides,  and  to  a  large  portion  of  later  speculation. 

He  continues: 

7- 

Things  which  are  not  can  never  be;  but  do  thou  avoid  this  path  of 
inquiry. 

1.V.34. 

Let  not  long  accustomed  habit  lead  thee  into  it  with  undiscerning 
eye  and  tongue  and  sounding  ear;  but  do  thou  judge  the  conflicting 
evidence  of  the  senses  by  means  of  the  Reason,  as  I  have  told  thee. 

8. 

There  is  but  one  other  way;  namely,  that  Being  exists.  It  contains 
many  proofs  that  it  is;  it  is  ungenerated  and  indestructible,  complete, 
unchangeable,  and  without  end.  It  was  not,  nor  will  it  be,  for  it  exists 
now;  one  and  indivisible.  Where  wilt  thou  seek  its  origin?  Whence 
could  it  be  increased.     .     .     . 

It  is  indivisible  and  homogeneous.  There  is  no  more  Existence  in 
one  place  than  in  another  to  prevent  its  perfect  consistency;  nor  is 
there  less.  It  is  everywhere  complete.  Being  embraces,  and  is  con- 
tained in,  Being.  It  is  moreover  immovable,  held,  as  it  were,  in  vast 
bonds;  without  beginning  and  without  end;  for  generation  and  dis- 
solution are  rejected  by  the  true  faith.     .     .     . 

The  thought,  and  the  cause  of  the  thought,  are  identical;  for  without 
the  subject  in  which  the  thought  is  expressed,  you  will  not  find  the 


Bk.  IV  Pre-Socratic  Thought  439 

thought.  There  neither  is,  nor  will  be,  anything,  but  that  which  is; 
for  fate  has  bound  it  in  one  complete  and  motionless  whole.  All 
those  things,  therefore,  which  men  perceive  through  the  senses,  and 
believe  to  be  true,  will,  in  reality,  be  nothing  but  names;  such  things, 
for  instance,  as  men  believe  arise  and  dissolve  into  others;  to  be  and 
not  to  be;  things  which  are  constantly  changing  their  positions  and 
appearances. 

This  phase  of  thought,  as  Parmenides  has  shown,  must  finally  refer 
"all  things"  to  the  abstract  human  reason,  acting  independently  of 
sense  experience.  Thus  Parmenides  di\ides  his  works  into  two  dis- 
tinct fields,  one  treating  of  real  existence,  or  truth,  and  the  other  of 
transient  opinion. 
He  says: 

1.V.29. 
Well  the  pure  heart  must  thou  know  that  dwells  in  the  truth  all  convincing; 
Also  opinion  of  men  which  not  upon  truth  has  been  foimded: 
But  these  things  shalt  thou  learn;  and  that  which  is  based  on  opinion, 
E'en  must  thou  judge  in  the  balance;  everything  carefully  weighing. 

All  changing  phenomena  will  thus  be  regarded  as  but  impressions 
left  upon  the  minds  of  men.  And  as  these  phenomena  form  and  fade 
and  vary,  they  are  in  reality,  or  rather,  in  non-reality,  but  the  names 
by  means  of  which  men  distinguish  them. 

19- 
Thus,  in  opinion  of  men,  have  things  and  their  changes  arisen. 
Things  which  seem  to  be  now;  yet  which,  as  they're  ever  maturing, 
Fade  and  vanish  away;  but  names  in  the  minds  of  mere  mortals. 

16. 
As  to  each  man  is  the  nature  fused  through  his  flexible  members, 
So  is  the  mind  of  the  man,  which  thinks  as  but  part  of  his  body; 
Thought,  in  each  and  in  all,  is  perfection  of  structural  being.' 

In  this  way  Parmenides  suggests  that  in  rational  cognition  alone 
may  truth,  or  real  Being,  be  found;  and  that  all  else  is  but  unsystematized 
sense  impression,  error,  or  opinion:  mere  names  or  idle  phantasies,  as 
Timon^  says. 

'  This  seems  the  sense  in  which  Parmenides  uses  the  words  ■zh  fip  icXIuv  Ist!  vit)na.  The  passage  is 
preserved  in  Aristotle;  who,  after  reference  to  Democritus  and  the  citation  of  two  passages  of  closely  allied 
meaning  from  Empedocles,  introduces  his  quotation  from  Parmenides  with  the  words:  xai  IlapiievtST.t^ 
li  dxo9a(v£T(zi  t6v  auiiv  Tp6xov  (Mctaph.  V.  $,  loog  b  21).  For  a  scholarly,  as  well  as  philosophic,  dis- 
cussion of  the  fragment,  Cf.  Lewes  History  of  Philosophy,  p.  876. 

'  Laertus,  IX.  3,  p.  232. 


440  Philosophy  Pt.  IV 

Rationalized  thought  here  develops  and  formulates  a  final  position 
with  reference  to  absolute  truth.  Truth,  or  Being,  is  that  which  exists 
and  only  that  which  exists;  and  this  Being,  or  Existence,  is  determined 
or  determinable  through  the  action  of  the  abstract  intelligence  alone. 
Parmenides  regarding  all  true  entities  as  One,  and  this  One  as  constitu- 
ting the  only  real  existence.  ^  This  One  exists,  and  nothing  else  exists 
in  the  literal  acceptance  of  the  terms.  This  is  the  position  established 
by  Parmenides  in  his  own  works;  and  in  the  words  of  Zeller,^  "the 
unanimous  testimony  of  later  writers." 

Thought  here  develops:  (i)  A  conscious  and  rationalized  state- 
ment of  the  inability  of  the  senses  to  present  truth.  (2)  A  perfect 
faith  in  the  action  of  the  human  reason,  unshaken  by  any  trace  of 
skepticism.  The  reason  here  denies  the  evidence  of  the  senses;  en- 
trenches itself  within  itself;  establishes  itself  as  its  own  criterion;  refers 
itself  for  verification  to  itself;  and  —  another  island  is  discovered  in 
the  seas  of  speculation;  the  ship  of  reason  here  puts  into  another  port, 
so  to  speak;  her  voyage  is  ended  in  this  direction.  The  reason  that  a 
final  port  in  inquiry  is  here  discovered  is  that  at  this  point,  in  denying 
the  validity  of  the  senses,  the  human  reason  denies  the  only  other 
source  of  rational  human  knowledge;  denies  the  validity  of  the  only 
other  philosophic  source  of  information  through  which  it  could  verify 
its  own  decisions.  There  is  nothing  but  the  evidence  of  sense  to  which 
reason  can  appeal  in  its  own  justification.  When  the  philosophic 
reason  denies  the  testimony  of  sense,  it  refers  itself  to  itself  for  verifica- 
tion; that  is,  it  denies  all  possibility  of  verification,  except  through  its 
own  conclusions;  it  disappears,  as  it  were,  in  a  cloud  of  ratiocination, 
and  inquiry  becomes  incapable  of  further  development.  Later  thinkers 
of  this  school  can  do  nothing  but  stay  here  and  defend  this  island  of 
rationalized  abstractions  discovered  by  Parmenides.  The  island  may 
be  defended,  but  it  cannot  be  moved  rationally;  there  is  no  philosophic 
lever  with  which  to  move  it.  All  philosophic  validity  of  sense  experienced 
here  disappears  for  the  first  time,  but  the  citadel  of  reason  remains. 
Just  as  Diogenes  represents  the  culmination  of  the  inquiry  of  the  earlier 
Physicists,  does  this  position,  as  formulated  and  defended  by  Zeno  and 
Melissus,  represent  the  culmination  of  the  inquiry  of  the  earlier  Meta- 
physicians. Thought  can  go  no  farther  in  this  direction:  the  hypothesis 
in  the  then  existing  condition  of  knowledge  is  exhausted.    Reason  here 


1  Aristotle  Metaph.,  A.  5;  986  b  28, 

•  Pre-Socratic  Philosophy,  Vol.  I.,  p.  587. 


Bk.  IV  Pre-Socratic  Thought  441 

posits  itself  as  the  final  standard  of  Truth;  refers  itself  to  itself,  and 
progress  ceases. 

Melissus^  formulates  the  position  as  follows. 

Article  5 — Zeno  and  Melissus. 


Whatever  was,  always  was,  and  always  will  be ;  for  had  it  come  into  being, 
it  must  have  been  nothing  before  it  came  into  existence.  But  if  it  were 
nothing,  it  is  impossible  that  anything  should  have  come  from  nothing. 

2. 

Since  Being  did  not  come  into  being,  is,  was,  and  always  will  be, 
it  has  no  beginning  and  no  end,  but  is  infinite.  Had  it  come  into  being, 
it  would  have  had  a  beginning  and  an  end,  for  its  existence  must  have 
begun  at  some  time,  and  must  cease  at  some  time.  But  if  it  neither 
began  nor  ended,  always  was  and  always  will  be,  it  has  no  beginning 
and  no  end.  It  is  impossible  for  anything  always  to  be  without  con- 
stituting complete  Being. 

4- 
Nothing,  having  a  beginning  and  an  end,  can  be  eternal  or  infinite. 

6. 
If  it  is  infinite,  it  must  be  One;  for  if  it  were  two,  they  could  not  be 
infinite;  for  they  would  be  limited  by  each  other. 

7- 
Being  therefore  is  eternal,  infinite,  one  and  homogeneous.  It  cannot 
decay,  become  greater,  change  nor  suffer;  for,  were  any  of  these  possible, 
Being  would  not  be  complete.  If  it  were  subject  to  change,  Being  would 
not  be  homogeneous,  for  that  which  existed  must  pass  away  and  Non- 
Being  come  into  existence.  For,  if  but  a  hair  changed  in  ten  thousand 
years,  all  would  be  destroyed  in  the  eternity  of  time.  It  is  not  possible 
that  Being  should  change,  for  that  which  was,  is  not  destroyed,  and 
that  which  is  not,  does  not  come  into  being.  Since  nothing  is  added  to 
Being,  nothing  taken  away,  and  it  cannot  differ,  how  could  existing 
things  be  altered?  For  if  anything  becomes  different  it  must  suffer 
change  and  alteration. 

This  is  the  culmination  of  the  Eleatic  school.  As  Erdmann^  says: 
"Just  as  Anaximenes  represents  the  highest  perfection  of  the  physio- 


>  Diels,  Vol.  I.,  p.  143. 

*  History  of  Philosophy,  Vol.  I.,  pp.  42,44. 


442  Philosophy  Pt.  IV 

logical,  so  Parmenides  represents  that  of  the  metaphysical  tendency. 
As  in  the  former  case,  it  is  no  more  possible  to  make  further  progress, 
in  the  doctrine  itself,  but  it  can  be  defended  against  opponents,  .  .  . 
By  the  side  of  Melissus,  as  the  champion  of  Eleaticism  as  opposed  to 
the  doctrines  beneath  it,  stands  Zeno,  who  protects  it  as  a  reactionary, 
combating  innovation.  His  task  is  a  desperate  one,  and  therefore 
requires  great  force.  Hence  the  great  subjective  importance  of 
the  man.  It  is  not  a  question  here  of  discovering  profound  novel- 
ties, but  of  exercising  all  imaginable  acuteness  in  order  to  secure 
what  has  been  found.  Hence  the  perfection  of  the  formal  side  of 
his  philosophizing,  which  makes  Zeno  into  the  Diogenes  of  Apollonia 
of  his  school." 

At  this  point  philosophy  reaches  a  mild  crisis  in  its  history,  the  founda- 
tions of  thought  are  scattered  and  confused.  Up  to  the  present  it  has 
seemed  possible  to  trace  each  speculative  hypothesis  through  a  logical 
sequence  of  ideas,  leading  naturally  and  necessarily  from  one  position 
to  another,  until  the  resources  of  the  hypothesis  are  exhausted  and  pro- 
gress is  no  longer  possible.  Thus,  to  continue  the  simile  adopted,  Anax- 
imenes  and  Diogenes  have  been  left  on  one  side  on  an  island  of  pure 
matter,  discovered  through  an  analysis  of  the  testimony  of  the  senses; 
and  Zeno  and  Melissus  may  here  be  left  upon  an  island  of  pure 
ideas,  or  of  abstract  ratiocination,  discovered  through  the  action  of 
the  reason,  independently  of  the  evidence  of  sense.  At  this  junc- 
ture, however,  progress  is  no  longer  possible  in  either  direction; 
all  momentum  is  spent;  and,  unless  Diogenes  or  Zeno  offers  all 
that  is  desired  in  cosmological  theory,  the  thinker  must  go  back  to  the 
starting-point  in  search  of  a  new  hypothesis  and  begin  once  more.  The 
Reason  begins  once  more,  and  in  doing  so  makes  another  circle,  and 
completes  what  might  be  called  the  first  metaphysical  cycle  of  thought. 
This  cycle  may  be  traced  from  its  beginning,  with  the  method  of  An- 
aximander  in  Miletus,  until  its  culmination  with  the  Eleatics.  It  ex- 
tends approximately  from  the  42nd  Olympiad  to  the  84th  Olympiad- 
from  about  611  B.  C.  to  about  444  B.  C. 

Section  IV  —  The  Metaphysical  Physicists 
[Article  i — HeraclUus. 

That  philosophy  here  reaches  a  crisis  is  evident  from  the  different 
classifications  adopted  by  historians  in  their  reviews  of  this  period. 


Bk.  IV  Pre-Socratic  Thought .  443 

As  the  fragments  and  records  of  the  thought  of  Heraclitus,  Empedocles, 
and  Anaxagoras  are  studied,  it  is  impossible  to  classify  them  philo- 
sophically with  any  of  their  predecessors;  although,  at  the  same  time, 
their  thought  is  essentially  dependent  upon  earlier  inquiry,  physical 
and  metaphysical.  It  seems  as  though  they  recognized  the  insufficiency 
of  the  basis  of  previous  speculation,  and  attempted  to  establish  new 
foundations  by  means  of  a  rearrangement  and  reorganization  of  the  old. 
The  crude  induction  of  the  period,  reasoning  from  direct  sense  perception, 
they  understood,  could  but  take  them  back  to  the  materialistic  island 
of  Diogenes.  On  the  other  hand,  in  developing  mental  abstractions, 
they  had  but  reached  the  idealistic  island  of  Zeno,  which  denied  the 
senses  any  participation  in  Reality.  Neither  of  these  islands  was 
sufficiently  large  or  strong  to  hold  all  the  thinking  minds  of  the  day; 
and  as  there  is  no  medium  through  which  the  human  being  can  come 
in  rational  contact  with  nature,  other  than  sense  and  reason,  men 
attempted  to  combine  the  physiological  and  psychological  methods  of 
the  earlier  thinkers.  This  is  a  new  idea  in  the  history  of  thought: 
the  starting-point  of  the  new  epoch.  The  ship  of  Reason  begins  a  new 
voyage  of  discovery  —  another  breeze  fills  her  sails,  and  seas  unex- 
plored lie  before  her  again. 

Two  distinct  and  complete  cycles  of  thought  have  now  been  traced: 
the  Ionian  and  that  which  cvdminated  with  the  Eleatics.  The  first  of 
these  is  purely  physiological;  the  second  purely  psychological.  In  other 
words,  one  culminates  in  a  world  of  pure  matter,  the  other  in  a  world  of 
pure  ideas.  They  have  led  to  nothing  but  a  materialistic  Cosmos  on  one 
side,  and  an  idealistic  Cosmos  on  another.  The  mind,  therefore,  has  no 
resource  but  to  accept  one  of  these,  or  make  an  attempt  to  reach  new 
discoveries  through  a  combination  of  earlier  methods.  Erdmann^  pre- 
sents an  excellently  understood  introduction  to  this  period  of  thought, 
which  had  better  be  transcribed  than  merely  paralleled: 

"The  antithesis  of  matter  and  category,  uXtq  and  Xoyoq,  as  Aristotle 
calls  it,  has  been  reduced  by  the  Pythagoreans  to  that  of  the  Many  and 
the  One,  and,  finally  by  the  Eleatics,  to  that  of  Non-Being  and  Being, 
to  formulas  which  even  Plato  makes  use  of  as  being  quite  adequate. 
In  attempting,  however,  to  carry  out  a  tendency  to  which  the  Pythag- 
oreans had  only  inclined,  viz.,  to  lay  stress  on  Being  to  the  exclusion 
of  Non-being,  the  Eleatics  became  pure  anti-physical  metaphysicians, 
and  form,  as  Plato  and  Aristotle  rightly  remark,  the  opposite  extreme 

» Ibid.,  p.  46. 


444  Philosophy  Pt.  IV 

to  the  Physiologers.  But  just  this  extreme  position  which  they  had 
taken  up  continually  compels  them  against  their  will  to  set  up  again 
what  they  had  tried  to  deny  just  before.  And  this  is  natural;  for 
if  Being  is  to  be  thought  to  the  exclusion  of  all  Non-Being,  and  the 
One  in  opposition  to  all  plurality,  the  thought  of  the  second  re- 
appears by  the  side  of  the  first,  just  as  along  with  the  thought  of 
the  concavity  of  a  surface  there  appears  that  of  the  convexity  of  the 
other  side.  The  Eleatics,  as  Aristotle  rightly  says,  have  been 
compelled  to  set  up,  by  the  side  of  their  science  of  Being,  a  theory  of 
that  which  they  nevertheless  declared  to  be  illusive  appearance.  And 
if  progress  consists  in  doing  wittingly  and  deliberately  what  was 
done  unconsciously  and  under  compulsion  from  an  earlier  point 
of  view,  progress  will  require  a  philosophy  which  combines  Being 
and  Non-Being,  the  One  and  the  Many,  and  hence  also  metaphysics 
and  physics. 

"Hence  the  Metaphysical  Physiologers,  or  physiological  metaphy- 
sicians, occupy  a  higher  position,  as  compared  with  the  groups  considered 
hitherto.  And,  in  the  case  of  at  least  two  of  them,  the  'Ionian  and 
Sicilian  Muses,'  this  position  has  been  fi:xed  by  Plato  with  an  accuracy 
that  admits  of  no  improvement.  If,  on  the  other  hand,  Aristotle 
reckons  them  among  the  physiologers,  he  overlooks  the  fact  that  his 
own  definition  of  the  conception  no  longer  fits  them,  since  they  do  not 
derive  everything  from  the  material  alone. ^^ 

Heraclitus  is  the  thinker  who  inaugurates  the  new  era;  formulates 
the  new  method.  The  Eleatics  recognize  an  absolute,  changeless  Unity, 
and  deny  existence  to  all  plurality,  or  change.  But  the  senses  show 
an  infinite  multiplicity  of  material  phenomena  undergoing  a  never- 
ceasing  process  of  change  and  movement  in  every  direction,  wherever 
the  subject  comes  in  contact  with  external  nature.  All  things  seen, 
heard,  or  perceived  in  any  way,  come  into  being,  bloom,  fade,  and  die. 
To  deny  this  process  and  attempt  to  regard  it  as  a  purely  imaginary 
presentation,  with  Parmenides  and  Zeno,  scarcely  offers  a  really  com- 
prehensive explanation  of  nature.  The  Eleatics  deny  Becoming, 
and  exalt  Being.  The  inevitable  revolt  occurs,  and  Heraclitus  reverses 
the  Eleatic  conception  in  the  denial  of  Being,  and  the  envelopment 
of  the  universe  in  a  process  of  eternal  change.  All  phenomena  flow- 
ing beneath  the  senses  present  a  never-ending  series  of  modifications. 
This  is  perhaps  the  first  thing  noted  in  the  external  world;  to 
deny  it  seems  superficial;    Heraclitus  makes   it    his   starting  point. 


Bk.  IV  Pre-Socratic  Thought  445 

The  following  are  his  most  important  speculative  fragments  as  num- 
bered by  Diels : 

30- 
This  Cosmos  is  the  same  for  all,  and  was  made  by  neither  gods  nor 
men.    It  always  has  been,  is,  and  always  will  be,  an  ever-living  fire, 
which  rhythmically  flares  and  fades. 

90. 
All  things  are  exchanged  for  fire,  and  fire  for  all  things;  as  exchange- 
able wares  are  turned  into  gold,  and  gold  again  into  wares. 

10  1.  23. 
Everything  changes  into  one,  and  one  into  everything  again. 

76. 
Fire  lives  in  the  death  of  earth,  air  in  the  death  of  fire;  water  lives 
in  the  death  of  air,  and  earth  in  that  of  water. 

36. 
For  souls,  it  is  death  to  become  water,  for  water  death  to  become 
earth;  but  water  comes  from  earth  and  soul  from  water. 

91. 
It  is  not  possible  to  go  twice  into  the  same  river,  nor  twice  to  find 
any  perishable  substance  in  the  same  condition;  for  these,  owing  to 
the  swiftness  of  their  changes,  disperse  and  reform,  though  never  the 
same,  but  recompose  and  disperse  anew,  and  again  reform  and  dissolve. 

49a. 
We  step,  and  we  do  not  step,  into  the  same  rivers;  we  are  and  we 
are  not. 

32. 

Wisdom  is  one.    It  wills,  and  wills  not,  to  be  called  Zeus. 

41. 
Wisdom  is  one.    It  is  to  know  the  Reason  by  means  of  which  all 
things  are  run  through  all  things. 

78. 
The  way  of  man  is  without  purpose,  but  not  that  of  God. 

108. 
Not  one  of  those  to  whose  discourses  I  have  listened  has  learned 
that  wisdom  is  something  separate  and  distinct. 

107. 
The  eye  and  the  ear  are  poor  witnesses  when  they  belong  to  the  ignorant, 

113- 
Understanding  is  common  to  all  men. 


446  Philosophy  Pt.  IV 

114. 
Those  who  would  speak  with  intelligence  should  hold  firmly  in  their 
reasonings  to  that  which  all  possess  in  common;  even  more  firmly 
in  fact  than  a  city  holds  to  its  laws.  All  human  laws  are  developed  from 
one  divine  law,  and  this  law  rules  as  it  wills  and  sufiices,  and  more 
than  suffices,  for  all  things. 

2. 
So  we  should  follow  that  which  is  possessed  in  common ;  yet,  although 
reason  is  possessed  in  common,  the  many  live  as  though  they  had  an 
understanding  peculiar  to  themselves. 

80. 
We  should  recognize  that  war  is  universal;  that  strife  is  the  normal 
course  of  nature,  and  that  all  things  arise  and  pass  away  through  proc- 
esses of  mutual  antagonism. 

53- 
Strife  is  the  father  of  all,  the  king  of  all,  the  maker  of  gods  and  men; 
some  slaves,  some  free. 

67. 
God  is  day  and  night,  winter  and  summer,  war  and  peace,  hunger  and 
satiety;  he  assumes  varying  forms,  as  blending  wreaths  of  incense;  and 
each  man  gives  him  the  name  he  pleases. 

100. 
The  changing  seasons  bring  everything  in  its  turn. 

123. 
Nature  loves  to  hide. 

45- 
The  boundaries  of  the  soul  you  would  not  find  though  you  wandered 
over  every  path. 

48. 
The  name  of  the  bow  is  life;  but  the  chord  it  strikes  is  death. 

26. 
Man  is  like  a  light  in  the  night;  lit  and  blotted  out. 

27. 
At  death  men  will  find  that  which  they  neither  hope  nor  expect. 

As  the  thought  of  Heraclitus  is  studied,  together  with  the  ideas  with 
which  the  speculative  intellects  were  occupied  during  the  age  under 
discussion,  the  influence  of  the  earlier  schools  is  marked;  but  this  in- 
fluence, in  its  progressive  significance,  is  traceable  in  an  attempt  to  com- 


Bk.  IV  Pre-Socratic  Thought  447 

bine  earlier  thought  in  a  comprehensive  system.  Matter  and  idea, 
substance  and  category,  uXt^v  and  Xoyoq,  instead  of  being  regarded  as  dis- 
tinct and  separate  entities,  as  in  earlier  inquiry,  are  combined  by  Herac- 
litus.  He  seeks  a  material  principle,  or  element,  of  changing  phenomena 
with  the  lonians,  and  finds  it  in  fire,  which  he  doubtless  chose  as  the  rarest 
and  most  changeable  of  substances.  He  questions  the  testimony  of 
the  senses  and  individual  opinion,  with  the  Eleatics,  and  recognizes 
with  them  that  reason  is  the  ultimate  criterion  of  Truth;  but  not  any 
reason,  that  reason  alone  which  men  possess  in  common  with  the  divine 
and  universal  Reason.  ^  Heraclitus  combined  these  earlier  phases  of 
thought,  and  involves  all  things  in  a  process  of  universal  flux,  arising 
from  what  he  calls  Strife,  a  principle  controlling  generation  and  cor- 
ruption, although  from  this  very  antagonism  itself  harmony  results. ^ 
This  harmony  might  be  compared  to  that  of  a  bow,  or  a  harp,  which 
results  from  opposed  tension. ^  The  elemental  substance  is  thus  under- 
going a  constant  process  of  conversion  and  reversion;  all  things  are 
changed  into  it;  and  it,  in  turn,  is  changed  back  again  into  all  things;  and 
the  process  is  endlessly  perpetuated  through  the  antagonistic  action  and 
interaction  of  generated  things  upon  each  other. 

If  nature  is  regarded  in  the  light  of  such  considerations,  the  resulting 
philosophy  will  be  largely  one  of  contradictions;  it  will  attempt  to  ride 
two  horses  at  the  same  time.  As  all  things  are  constantly  reverting 
to  their  element,  and  as  this  element  again  is  undergoing  a  corresponding 
and  opposed  process  of  conversion  into  all  things,  one  thing  may  be 
considered  in  much  the  same  light  as  another;  for  it  is  but  a  question 
of  time  until  everything  becomes  something  else,  or  generates  its  own 
opposite.  This  is  exactly  the  position  formulated  by  Heraclitus.  The 
endless  flux,  in  which  all  things  that  flow  beneath  the  senses  are  involved, 
seems  to  present  nothing  stable,  nothing  certain;  phenomena  merely 
appear  as  wraiths  of  smoke  or  incense,  blending  in  a  restless  series  of 
unending  generation  and  degeneration;  they  are  simply  caught  up 
into  existence  for  a  moment,  like  bubbles  in  a  stream,  to  be  changed  again 
into  something  else  or  their  own  negation,  as  the  only  purpose  of  their 
being.     One  thing  is  thus  very  much  like  another: 

59. 

The  straight  and  the  crooked  are  one. 


'  Sextus  Empiricus     Adv.  Math,  VII.,  126,  131. 
«  Frag.   8. 
•  Frag.  SI. 


448  Philosophy  Pt.  IV 

S8. 
Good  and  bad  are  the  same. 

60. 
The  road  up  is  the  same  as  the  road  down. 

8 
Opposition  unites. 

61 
The  sea  is  both  the  purest  and  foulest  of  water;  drinkable  and  bene- 
ficial to  fish,  undrinkable  and  harmful  to  men. 

126 
The  cold  becomes  hot;  the  wet  dries,  and  the  parched  becomes  moist. 

These  statements  of  the  identical  nature  of  contraries  do  not  seem 
mere  metaphysical  quibbles,  when  the  conditions  of  early  thought  are 
understood,  and  an  attempt  is  made  to  look  at  the  world  through  the 
eyes  of  this  suggestive  old  thinker  of  Ephesus.  The  rational  ground 
of  this  position  could  not  be  better  explained  than  in  the  following 
passage  from  Plutarch,  ^  citing  Heraclitus: 

*'It  is  the  same  thing  to  be  alive  or  dead,  awake  or  asleep,  young 
or  old;  for  all  these  are  changed  into  each  other.  Just  as  the  potter 
fashions  different  living  forms  out  of  the  same  clay,  and  as  easily  destroys 
them  again,  and  repeats  the  process  indefinitely,  so  nature,  from  the 
same  matter,  fashioned  our  ancestors,  our  fathers  and  ourselves,  and 
will  evolve  the  generations  yet  to  come.  Thus,  as  the  stream  of  genera- 
tion flows  endlessly  on  in  one  direction,  so  the  stream  of  dissolution 
flows  eternally  on  in  another,  whether  the  poets  call  it  Acheron  or 
Cocytus.  So  it  is  that  the  same  cause  which  first  opened  our  eyes 
upon  the  light  of  day  carries  us  ever  on  and  down  to  eternal  night." 

Few  passages  present  a  more  vivid  impression  of  the  involved, 
criss-cross  method  of  Heraclitus  than  his  conception  of  ^  "immortal 
mortals  and  mortal  immortals,  dying  their  life  and  living  their 
death."  As  these  fundamental  ideas  of  Heraclitus  are  studied  in 
relation  to  earlier  thought,  the  attention  is  drawn  to  two  phases  of 
inquiry. 

The  first  Ionian  thinkers  regarded  matter  as  distinct,  and,  conse- 
quently, developed  a  purely  materialistic  Cosmos.  The  Eleatics  turned 
their  attention  to  an  analysis  of  the  independent  reason,  and  culminated 


^Consol.  ad  Apoll,    10.    p.  127, 
•  Frag.  62. 


Bk.  IV  Pre-Socratic  Thought  449 

in  an  idealistic  system.  Heraclitus  rejects  both  positions,  and  begins 
a  new  epoch  with  the  combination  of  the  two,  undergoing  constant 
modification.  If,  then,  inquiry  begins  anew  with  this  combination 
method,  the  attention  naturally  turns  to  a  closer  analysis  of  the  nature 
of  matter,  through  the  modification  of  which  all  change  is  produced; 
and  again,  to  the  effects  of  this  change  upon  the  human  reason  itself. 
The  reason  can  no  longer  be  regarded  as  an  independent  entity  with 
the  Eleatics,  but  becomes  involved  with  material  processes,  even  in 
its  "divine  and  universal"  significance,  as  Heraclitus  would  say;  both 
as  dependent  upon  the  physical  constitution  of  the  subject,  and  the 
universal  flux  of  matter,  through  which,  in  some  phase  or  other,  it 
seems  all  subjective  impressions  are  derived  —  the  development  of  a 
thought  suggested  by  Parmenides^  The  lonians,  on  reaching  what 
they  considered  the  ultimate  physical  element  of  the  Cosmos,  neces- 
sarily ceased  to  speculate:  their  knowledge  could  take  them  no  farther. 
To  a  mind,  however,  standing  upon  the  higher  level  of  a  later  age,  the 
resolution  of  phenomena  into  a  material  principle  suggests  inquiry 
into  the  nature  of  the  principle;  and  when  it  is  recognized  that  all  phe- 
nomena, into  which  this  principle  enters,  exist  in  a  condition  of  constant 
instability,  the  mind  drifts  ine\itably  toward  questions  dealing  with 
the  effects  of  this  instability  upon  the  action  of  Reason.  The  stream 
of  physical  phenomena,  flowing  beneath  the  senses,  must  bear  an  im- 
portant relation  to  the  human  intellect  itself;  and  knowledge  derived 
from  it  must  appear  of  a  more  or  less  ephemeral  nature.  These  are 
the  thoughts  suggested  in  a  study  of  the  records  of  Heraclitus.  He 
inaugurates  more  systematic  inquiry  into  the  nature  of  matter,  and 
the  action  of  the  human  intelligence:  two  important  steps  in  the  history 
of  thought.  Speculation  along  these  lines  will  develop  an  analysis  of 
matter  on  one  side,  and  discover  the  purely  relative  results  of  the 
human  reason  on  another.  As  Aristotle^  suggests  of  Heraclitus,  he 
will  begin  to  regard  all  things  as  being  and  not  being;  and  all  opinion 
as  relatively  true. 

riawa  x^PS'j  says  Heraclitus,  "all  things  move,"  and  the  movement  is 
caused  by  the  antagonism  of  generated  things  acting  upon  each  other. 
This  brings  about  their  dissolution,  back  again  into  the  primitive  element 
from  which  they  were  derived;  and  the  process  is  endlessly  repeated. 
Upon  this  position,  then,  as  the  basis  of  investigation,  and  with  move- 

'  Frag.  16. 

*  Melaph.  P.  3,  1005  b  14. 


4SO  Philosophy  Pt.  IV 

ment,  or  generation,  caused  by  Strife,  the  question  arises:  What 
causes  the  strife?  Why  should  the  natures  of  material  phenomena 
be  sufl&ciently  antagonistic  to  generate  the  sum  of  the  movement  of 
the  universe?  Heraclitus  is  silent.  Thought  must  move  on.  Why  are 
things  changed  into  each  other?    What  is  the  origin  of  movement? 

Article  2 — Empedocles. 

Empedocles,  the  mysterious  and  magnificent,  appears  upon  the 
horizon.  He  perceives  both  the  strength  and  the  weakness  of  earlier 
investigation;  recognizes  the  necessity  of  answering  the  question  with 
reference  to  the  nature  of  matter  and  movement,  and  is  as  impressed  as 
Heraclitus  with  the  speculative  importance  of  change.  He  looks  upon 
the  sum  of  things  and  sees  no  permanence  anywhere;  not  even  a  per- 
manent element,  or  substance,  with  Heraclitus;  not  even  a  permanent 
generation  of  things  from  this.  He  sees  nothing  but  unresting  move- 
ment, devoid  of  all  stability,  even  of  that  of  death  itself. , 


There  is  no  origin  of  generate  things; 
There  is  no  birth  nor  woeful  death  to  fear; 
There  is  alone  a  mingling,  changing  mass 
Of  things  that  rise  and  fade,  a  constant  flux; 
This  mortals  birth  and  generation  caU. 

II. 
Fools,  fools!  For  no  deep  sinking  thought  have  they 
Who  think  that  aught  can  ever  come  to  be, 
That  was  not  in  oexistence  long  before; 
Or  yet,  who  think  that  aught  that  is,  can  cease. 
Or  wholly  fade,  and  perish  utterly. 

12. 
For,  from  what  is  not,  naught  can  e'er  arise; 
And  that  a  thing  that  is,  should  vanish  quite. 
Ne'er  can  occur;  unheard  of  and  unknown. 
For  things  must  stay  there  where  they  shall  be  placed; 
And  e'er  remain  where  they  have  always  been. 

Empedocles  accepts  the  flux  of  Heraclitus,  but  sinks  deeper  into  the 
nature  of  change.  He  rejects  the  primitive  substance  of  the  lonians 
altogether,  resolving  matter  into  elements,  or  unchanging  principles; 
and  accounts  for  change,  or  motion,  by  means  of  two  forces  in- 
stead of  one.  These  forces,  in  the  metaphorical  language  of 
the  day,  he  calls  Love  and  Hate;  and  refers  their  action  to  the 


Bk.  IV  Pre-Socratic  Thought  451 

essentially  similar  and  dissimilar  constitution  of  material  phenomena. 
His  words  are: 


17. 
Two-fold   the   truth   which   I   shall   now  proclaim: 
Once  from  the  Many  grew  the  One  alone, 
And  then  the  One,  in  separate  parts  dissolved, 
And  Many  from  the  One  there  came  to  be. 
So  thus  two-fold  the  birth  of  changing  things, 
Two-fold  their  death;  for  that  which  these  imite 
Must  death  create,  and  death  destroy,  as  well; 
And  birth,  which  out  of  scattered  things  must  grow, 
Will,  in  its  turn,  thus  fade  and  fly  away. 
Nor  ever  cease  these  things  their  constant  change; 
United  now  by  Love  all  into  one. 
And  now  by  Hate  asunder  torn  in  turn; 
Until  together,  once  again,  they  blend 
And  thus  become  united  in  the  All. 
And  so,  as  One,  from  out  the  Many  comes, 
And  Many  grow  from  separate  in  the  One, 
All  things  arise;   nor  life-term  fixed  have  they; 
But,  with  their  changing  elements,  they  live 
And  endless  cycle  of  a  changeless  change. 

This  is  a  new  speculative  conception;  change,  or  motion,  is  here 
represented  by  two  distinct  forces  acting  upon  the  elemental  principles 
underlying  material  phenomena;  these  elements  themselves  being 
unchangeable.  The  next  question  is:  What  are  these  elements;  these 
unchanging  principles  underlying  the  modification  of  matter?  Em- 
pedocles  replies,  doubtless  developing  a  thought  derived  from  Py- 
thagoras:^ 

6. 

Four  roots  there  are  from  which  aU  things  arise: 

King  Zeus,  and  Hera,  and  Aidoneus, 

And  with  them  Nestis,  of  the  weeping  eyes. 

That  moisten  mortal  fountains  with  her  tears. 
17  V.  18. 

Fire,  earth,  and  water,  and  the  boundless  air; 

Love,  blent  with  these,  e'er  equal  far  and  wide, 

While  baleful  Strife,  apart,  the  balance  holds. 

Here  is  a  definite  conception  of  matter  and  motion,  as  four  unchanging 
elements;  acting  and  reacting  upon  each  other  through  opposed  and 

'  Laertius.     VIII.  i.  p.  210. 


452  Philosophy  Pt.  IV 

counter-balancing  forces,  causing  integration,  or  union  on  one  side; 
disintegration,  or  disunion,  on  another. 
Empedocles  continues  his  exposition: 

17  V.  27. 
And  these  four  elements  of  separate  things 
All  equal  are,  and  in  their  age  the  same; 
Yet  each  one  different  offices  may  fill, 
As  each  is  better  suited  to  the  task; 
Thus  each  may  rule  with  changing  flight  of  time. 
And  nothing  can  be  added  to  these  four, 
Nor  aught  be  ever  drawn  from  them  away; 
For  were  this  so,  would  they  soon  cease  to  be, 
And  what  could  e'er  the  Sum  of  things  increase? 
From  whence  to  All  in  All  such  increase  come? 
Destroyed  where  could  they  go,  these  elements, 
Whence  all  evolves;  are  they  not  everywhere? 
Thus  these  alone  exist  the  same,  and  blend. 
And  through  each  other  run;  and  thence  arise 
All  other  changing  things;  while  these  remain 
The  same,  unchanged  throughout  Eternity. 

Empedocles  develops  an  improvement  upon  the  theory  of  the  Cosmos 
advanced  by  Heraclitus.  Matter  is  here  resolved  into  four  elements, 
which  have  always  been,  and  always  w^ill  be,  essentially  the  same. 
The  modification  in  the  combinations  of  these  elements  produces  the 
varying  phenomena  of  the  material  world.  These  different  combina- 
tions of  the  elements  are  caused  by  two  forces:  Love  and  Hate,  or 
Harmony  and  Discord,  acting  upon  them. 

The  next  question  is:  What  is  the  nature  of  the  action  of  these  two 
forces?  Why  do  things  repel  each  other  or  unite?  Why  do  they 
blend  on  one  side,  and  refuse  to  combine  on  another?  This  is  the 
inevitable  question  of  the  origin  of  motion;  the  question  at  which  all 
previous  thinkers  had  hesitated,  and  over  which  their  systems  trip 
and  fall.  Empedocles  realizes  its  importance,  grasps  the  fact  that  it 
had  never  been  answered,  frees  himself  from  all  earlier  entanglements; 
and  answers  the  question  with  the  most  interesting  and  important 
cosmological  theory  yet  developed.  The  process  of  change,  or  motion, 
he  says  is  analogous  to  that  through  which  the  painter  produces  varied 
forms  by  means  of  the  different  combinations  of  a  few  elementary  pig- 
ments. In  nature  the  real  forms  are  produced  in  the  same  way.  The 
pigments  are  represented  by  the  four  elements  underlying  material 


Bk.  IV  Pre-Socratic  Thought  453 

phenomena;  and  the  process  of  combination  or  disintegration  is  due 
to  the  like,  or  unlike,  nature  of  the  various  substances  produced;  those 
which  are  like  blending  and  forming  new  combinations,  the  unlike 
repelling  each  other  and  causing  corresponding  disintegration.  He 
explains  in  greater  detail: 

23  Thus,  as  when  masters  of  the  painters'  art, 

Who  would  some  varied  votive  shrine  prepare, 

Take  many  coloured  pigments  for  their  task; 

And,  blending  these  in  skilful  harmony, 

Resemblances  present  of  many  things; 

As  more  or  less  of  this  or  that  they  choose. 

Thus  trees  they  trace,  and  men's  and  women's  forms, 

And  savage  beasts,  and  soaring  birds  of  prey. 

And  fish  beneath  the  sea,  and  e'en  as  well 

The  long-lived  gods;  in  honour  o'er  them  all. 

So  let  not  error  now  thy  mind  mislead 

To  think  that  of  the  countless  things  so  brought 

To  real  existence,  other  source  there  is 

Than  these  four  elements;  and  mark  my  word, 

For  what  those  hearest  comes  as  from  a  god. 
22  And  thus  all  things  in  parts  of  each  imite; 

The  sun,  the  earth,  the  heavens,  and  the  sea. 

Where  like  finds  like  in  separate,  changing  things: 

And  so  those  forms  the  best  prepared  to  blend, 

To  their  own  kind  are  ever  drawn  by  Love; 

And  things  unlike  are  farthest  forced  apart. 

In  birth,  in  combination  and  in  form. 

To  mingling  all  opposed;  in  hatred  steeped; 

So  led  by  Strife  which  thus  has  wrought  their  birth. 
37  So  fire  grows  from  fire,  and  the  -earth 

In  substance  grows  from  earth;  the  air  from  air. 

90  Thus  sweet  with  sweet  unites,  the  sharp  with  sharp, 
The  bitter  with  the  bitter,  hot  with  hot. 

91  The  water  quick  in  ruddy  wine  will  melt 
But  never  with  the  oil  will  it  combine; 

109  And  tJius  it  is  that  earth  through  earth  we  see, 

Through  moist  the  moist,  through  air  the  ether  clear; 

And  learn  through  fire  of  its  destructive  flame. 

Through  Love  of  Love  we  leam^  through  Strife  of  Strife: 
107  For  out  of  these  are  all  things  wrought  and  formed: 

Through  these  we  think  and  suffer  and  enjoy. 

The  first  inquirers  devote  their  attention  to  the  discovery  of  an  ulti- 
mate primitive  substance,  the  modifications  of  which  produced  the 


454  Philosophy  Pt.  IV 

changes  in  sensible  phenomena;  the  development  of  this  conception 
culminates  in  the  position  of  Anaximenes  and  Diogenes.  If  a  Cosmos 
of  vitalized  air  fails  to  satisfy  the  mind,  a  new  theory  of  matter  is  re- 
quired. This  may  be  found  by  rejecting  the  primitive  substance  of 
the  lonians,  the  changeable  substance  of  Heraclitus,  and  resolving 
substance  into  unchanging  elements.  Change  may  then  be  explained, 
not  by  expansion  and  contraction,  nor  by  a  process  of  reversion  and 
conversion,  but  by  different  combinations  of  the  elements  of  which 
substance  is  composed.  This  is  the  most  important  step  yet  made  in 
cosmological  speculation.  The  elements  of  Empedocles  fulfil  these 
conditions,  as  Aristotle^  points  out;  and  form  the  primitive,  imperish- 
able constituents  of  matter.  Change,  therefore,  depends  upon  the 
movement  and  combinations  of  these  elemental  principles. 

At  this  point,  must  occur  another  radical  development  in  thought.  If 
matter  is  resolvable  into  changeless  elements,  and  not  into  a  homo- 
geneous substance  subject  to  modification,  the  phenomena  of  motion 
must  be  something  distinct  from  matter;  in  other  words,  the  unchange- 
able elements  of  matter  must  be  acted  upon  by  something  other  than 
themselves,  in  order  to  account  for  the  phenomena  of  change.  It  is 
here  necessary,  therefore,  to  distinguish  between  matter  and  motion. 
Empedocles  recognizes  this  necessity  perfectly  and,  as  Aristotle^  says, 
was  the  first  thinker  to  do  so;  an  important  development  in  thought. 
In  distinguishing  motion  from  matter,  he  divides  motion  into  two 
principles,  different  and  opposite.^  Here,  then,  for  the  first  time  in 
speculation,  distinct  conceptiojis  of  matter  and  motion  are  reached;  of 
the  first,  as  composed  of  four  unchanging  elements,  from  the  combinations 
of  which  variable  phenomena  arise;  of  the  second,  as  two  forces  gene- 
rated through  the  action  and  interaction  upon  each  other  of  like  and 
unlike  substances.  The  Cosmos  is  thus  reduced,  in  its  simplest  terms, 
to  four  elements,  in  a  self-generated  state  of  flux.  But  as  the  human 
physical  constitution  is  caught,  as  it  were,  in  the  process;  and,  as  the 
human  mind  itself  may  be  regarded  as  dependent,  not  only  in  its  action, 
but  for  its  existence,  upon  the  physical  constitution  of  the  subject; 
it  seems  evident  that  the  human  reason  at  this  point  may  be  regarded 
as  a  more  less  questionable  source  of  information  with  reference  to  the 
Absolute.    Empedocles  is  alive  to  the  position,  and  seems  to  have  had 


•  Metaph.  B.,  4;  1000  b  19. 

*  Ibid.  A.  4;  985  a  8  and  30. 
»Ibid, 


Bk.  IV  Pre-Socratic  Thought  455 

no  very  exalted  opinion  of  the  race  of  men;  either  as  a  whole,  or  in  its 
higher  intellectual  manifestations: 

124. 
Alas!  ye  wretched  races,  wretched  men, 
Of  what  blind  strife  and  woes  have  ye  been  born! 

2. 
And  mean  the  mind,  throughout  your  members  fused, 
With  many  ills  and  many  numbing  cares; 
And  brief  the  dreary  span  of  life,  that  turns 
So  quick  to  death,  like  fleeting  smoke  consumed; 
Each  soul  but  trusting  in  the  things  alone. 
That  each  within  its  own  experience  finds, 
Distraught  upon  all  sides,  yet  seeking  Truth. 
In  vain!  for  not  in  eye,  nor  ear  of  man. 
Nor  reason,  can  the  truth  be  found;  and  thou, 
When  thou  hast  swept  through  error's  futile  round, 
Mayst  know  that  man  may  never  farther  see.' 

If  the  pure  speculation  is  extracted  from  the  poetry  of  Empedocles 
four  positions  are  developed:  (i)  The  resolution  of  matter  into 
imperishable  elements.  (2)  The  action  and  interaction  of  the  com- 
binations of  these  elements  upon  each  other  as  the  principle  of  motion, 
or  change.  (3)  The  necessity  of  distinguishing  motion  from  the  ma- 
terial elements  themselves.  (4)  The  position  is  beginning  to  be 
understood,  owing  to  the  physical  constitution  of  man,  that  the 
human  intellect,  or  source  of  rational  knowledge,  must  be  contained 
\vithin,  and  dependent  upon,  an  all-pervading  flux.  Both  sense  and 
reason,  therefore,  in  all  their  manifestations,  may  be  regarded  as  but 
the  ever  varying  phases  of  a  self-perpetuating  series  of  modifications. 
As  Zeller^  says: 

"Heraclitus  had  deprived  substance  of  all  permanence;  Parmenides, 
on  the  contrary,  had  denied  generation  and  decay,  motion  and  change; 
Empedocles  strikes  out  a  middle  course.  He  maintains  on  the  one 
hand  with  Parmenides,  that  Becoming  and  Decay  in  the  strict  sense, 
and  therefore  qualitative  change  in  the  original  substance,  are  un- 
thinkable; but,  on  the  other  hand,  he  does  not  absolutely  abandon  this 
point  of  view.  He  allows  not  only  that  particular  things,  as  such, 
arise,  decay,  and  change,  but  also  that  the  conditions  of  the  world  are 
subject  to  perpetual  change.     Consequently,  he  is  obliged  to  reduce 

*The  numbers  are  those  of  Diels.  The  arrangement  that  which  seems  best  to  develop  the  thought  of 
Empedocles. 

»  Pre-Socratic  Philosophy.     Vol.  II.,  pp.  117-121.     Translation  by  Alleyne. 


456  Philosophy  Pt.  IV 

these  phenomena  to  movement  in  space,  to  the  combination  and  separa- 
tion of  underived,  imperishable,  and  qualitatively  imchangeable  sub- 
stances, of  which  there  must,  in  that  case,  necessarily  be  several,  variously 
constituted,  in  order  to  explain  the  multiplicity  of  things." 
There  is  but  one  more  step  in  this  direction. 

A  rticle  j — Democritus. 

To  the  rational  mind  the  position  of  Empedocles,  in  its  relation  to 
cosmical  phenomena,  is  unsatisfactory  in  two  ways:  (i)  In  its  con- 
ception of  the  elements  of  matter.  (2)  In  its  conception  of  motion, 
or  force,  acting  upon  these.  That  is  to  say,  it  is  completely  unsatis- 
factory. 

1.  Empedocles'  conception  of  the  elements  of  matter  is  unsatis- 
factory for  the  following  reasons:  He  posits  four  elemental  principles. 
All  material  phenomena,  he  says,  are  changeable  and  corruptible, 
with  the  exception  of  these.  But  here  a  difficulty  occurs.  Why, 
if  all  things  are  derived  from  the  same  source,  should  some  of  these 
be  changeable  and  others  unchangeable?  Upon  such  an  assumption 
it  seems  that  the  sources  of  things  must  be  different  —  a  strange  con- 
clusion. Again,  these  elemental  principles  must  be  either  different 
or  the  same.  If  different,  or  unlike  each  other,  they  must  either  be 
subject  to  change  or  changeless,  (a)  If  subject  to  change,  they  must 
be  resolvable  into  other  elements,  which  is  impossible;  both  from  the 
original  hypothesis  and  in  the  contemplation  of  an  infinite  progression. 
These  elements  must,  therefore,  necessarily  be  changeless,  in  order  to 
constitute  elements,  or  first  principles.  (^)  If  these  elements  are 
different,  or  unlike  in  essence,  the  question  arises:  How  may  things 
unlike  be  derived  from  elements  which  are  unlike?  In  order  that  all 
elements  of  difference  may  be  derived  from  changeless  first  principles, 
it  seems  that  these  principles  themselves  must  be  identical,  or  homo- 
geneous, in  nature.  In  other  words,  the  ultimate  principles  from  which 
the  phenomena  of  change  and  difference  are  derived  must  be  essentially 
the  same.  What  rational  ground  may  be  discovered,  in  a  universe  of 
things  different,  for  the  assumption  that  the  elemental  principles  of 
things  are  also  different?  As  Aristotle  ^  says,  the  thing  is  impossible, 
or  demands  a  lengthy  process  of  ratiocination.  The  process  has  never 
been  forthcoming,  and  the  position  is  suggested  that  the  elements  of 
matter  must  be  like  in  nature,  or  essentially  identical.    Thus,  in  com- 

>  Uctaph.  B.  4;  1000  b  31. 


Bk.  IV  Pre-Socratic  Thought  457 

bining  the  positions  developed  under  a  and  ^  it  seems  that  the 
first  principles,  or  elements  of  matter,  must  be  both  changeless  and 
the  same.  Changeless  because,  in  order  to  be  elements,  they  can  permit 
of  no  further  analysis  or  division;  the  same,  because  they  must  contain 
within  themselves  all  elements  of  difference.  These  considerations 
lead  to  the  rejection  of  the  four  different,  or  unlike,  elements  of  Em- 
pedocles;  and  to  the  position  that  the  elements  of  matter  must  be  homo- 
geneous particles;  identical  in  essence  and  incapable  of  modification  or 
division. 

II.  The  conception  of  Empedocles  with  reference  to  motion  is  also 
unsatisfactory.  The  conception  of  two  forces  acting  upon  matter, 
through  a  process  of  integration  and  disintegration  of  substances,  like 
and  unlike,  necessarily  involves  a  contradiction  of  terms.  As  Aristotle^ 
points  out,  every  integration  must  involve  a  corresponding  disintegration 
upon  another  side,  and  vice  versa.  Force,  or  motion,  therefore,  cannot 
rationally  be  divided  at  all;  for  all  force,  or  motion,  in  ultimate  analysis, 
must  be  essentially  one. 

These  positions  lead  to  the  fully  formulated  atomic  theory  of  the 
Cosmos,  as  developed  by  Leucippus  and  Democritus.  Matter  is  here 
resolved  into  changeless,  indivisible  units,  or  elements;  absolutely 
simple  and  homogeneous,  thus  presenting  no  qualitative  distinctions, 
although  infinitely  varied  in  size,  weight,  form,  and  reciprocal  relations. 
These  variations  present  the  elements  of  motion,  difference  in  size 
involving  difference  in  weight;  heavier  atoms,  because  of  their  relative 
weight,  sinking;  and  in  so  doing,  forcing  lighter  and  less  consistent 
combinations  upward,  or  in  different  directions.  Revolutions  will 
thus  occur  and,  consequently,  motion  of  all  kinds  be  generated.  This 
motion,  however,  it  seems,  should  be  distinguished  from  force  in  the 
later  sense  of  the  word,  despite  several  texts  to  the  contrary.  Zeller^ 
takes  Lewes  to  task  for  lending  the  conception  of  force  to  the  atomic 
theory  of  this  period.  Weight  alone,  it  seems,  was  thought  sufficient 
to  explain  motion,  and  the  references  of  Aristotle  support  this 
view. 

If  atoms  are  indivisible  and  regarded  as  entities,  they  must  occupy 
space;  that  is,  there  must  be  a  distinction  between  space  and  that  which 
it  contains  —  between  matter  and  that  in  which  matter  moves.  If 
the  first  is  regarded  as  entity,  the  second  should  be  regarded  as  nonentity, 

'  Metaph.  A.  4;  985  a  27. 

'  Pre-Socratic  Philosophy.    Vol.  II.,  p.  241.     Note  t. 


458  Philosophy  Pt.  IV 

or  the  void.  Thus,  only  two  things  may  be  considered  as  possessing 
any  cosmical  significance:  matter  and  empty  space,  atoms  and  the  void.*  , 

This  conception  of  the  Cosmos  requires  a  mechanical  theory  of  sen- 
sation. This  Democritus  appreciates,  and  supplies  in  the  theory  of 
external  phenomena  constantly  throwing  off  forms,  or  more  or  less 
perfect  images  of  themselves,  which  "  fall  in,"  as  it  were,  upon  the  mind 
through  the  sensitive  surfaces  of  the  physical  organization,  and  thus 
produce  sensation.  The  thing  in  itself,  therefore,  or  the  object  which 
produces  the  sensation,  can  never  be  perfectly  known  to  the  subject, 
or  that  in  which  the  sensation  is  produced;  for  the  subject  can  only 
receive  the  object  through  that  incomplete  part  of  it  which  sense  is 
capable  of  absorbing.  These  sensations  will,  of  course,  resolve  them- 
selves into  reflective  activity  within  the  subject;  but  this,  and  all  other 
mental  phenomena,  must  remain  dependent  upon  the  motion  pro- 
duced by  the  gravitation  of  atomic  material  elements  and  conditioned 
by  it.  All  sensation,  therefore,  must  be  the  result  of  the  contact  of 
matter,  and  the  other  senses  may  be  resolved  into  modifications  of 
the  sense  of  touch. ^  Sextus^  cites  the  exact  words  of  Democritus  as 
follows:  "Opinion  alone  is  the  sweet,  opinion  the  bitter,  opinion  the 
hot;  and  subjective  impression  and  opinion  alone  are  the  colour  and 
the  appearance  of  things.  In  causal^  reaHty  nothing  exists  but  atoms 
and  the  void.  Sensible  phenomena,  which  in  opinion  are  supposed 
to  exist,  have  no  real  existence;  nothing  really  is  but  space  and  atoms." 

The  simplest  and  most  nearly  complete  statement  of  the  Demo- 
critical  position,  at  a  single  source,  is  perhaps  that  of  Laertius.  It 
is  in  accord  with  all  others  of  the  best  understood  notices  of  this  important 
thinker.  Laertius^  says  that  Democritus  regarded  "Space  and  Atoms 
as  the  elemental  principles  of  the  universe,  and  all  else  as  mere  subjective 
opinion.  He  said  that  the  worlds  were  infinite,  generated  and  perish- 
able, that  nothing  could  come  from  nothing,  and  nothing  return  to 
nothing;  that  the  atoms  were  infinite  in  size  and  number,  and  borne 
through  space  in  endless  revolutions.    Thus,  all  things  are  produced 

'  Aristotle,  Metaph.  A.  4.  085  b  4;  F.  5,  1009  b  11;  A.  2;  1060  b  22;  Phys.  V.  4;  205  a  33;  DeCoelo  A  7 
275b  30;  r.  2.  300b  S;  DcGen  cl  Corr.  A.  i,  314  a  21;  A.  7,  323  b  10;  De  An.  A.  2,  404  a  27;  A.  3,  406 
b  17,  Laertius  DC.  VII. 

*  Aristotle  De  Sensu.  4.  442  b  i. 

'  Adv.  Logic.  VII.  13s,  p.  310. 
,      *  There  seems  no  reason  for  abandoning  the  old  reading  (aktu).     It  is  in  complete  harmony  with  the 
system  of  Democritus,  and  presents  a  better  antithesis  to  v6(i(|)  than  its.fi.     CL  Fabricius  not£  d.,  p.  310, 
Lewes,  p.  g6. 

»  iX.  7,  p.  J38. 


Bk.  IV  Pre-Socratic  Thought  459 

from  atoms:  fire,  water,  air,  and  earth  arising  from  atomic  combinations; 
that  these  present  nothing  but  combinations,  although  permanent  and 
unafifected  on  account  of  their  solidity.  That  the  sun  and  the  moon  are 
in  like  manner  formed  from  such  revolving  bodies;  and  the  soul  in  the 
same  way,  the  mind  and  the  soul  being  identical.  That  we  see  through 
the  falling  of  images  on  the  eye;  and  that  everything  is  due  to  mechanical 
law,  or  necessity.  That  motion  is  the  origin  and  cause  of  the  generation 
of  all  things  and  this  motion  he  called  necessity." 

Real,  or  pure,  knowledge,  independent  of  subjective  opinion,  or 
appearance  derived  from  sense  perception,  can  naturally  have  no  place 
in  such  a  conception  of  the  Cosmos;  and  Democritus,  possessing  a 
rarely  exact  intelligence,  perceives,  anticipates,  and  accepts  every 
rational  conclusion  to  be  derived  from  the  atomic  conception  of  the 
Universe.  He  is  cited ^  as  saying  that  there  either  is  no  truth,  or  that 
man  is  blind  to  it,  for  it  lies  in  an  abyss;  that  no  test  of  any  kind  of 
appearance  exists,  and  that  there  is  no  criterion  of  truth. 

As  the  universe  is  contemplated  from  this  point  of  view,  it  seems  a 
boundless  realm  of  vacant  space,  through  which  an  infinity  of  minute 
material  particles,  without  qualities  and  without  sensation,  fall  eternally; 
or  act  and  react  upon  each  other  in  an  unending  process  of  restless, 
unconscious  movement,  in  harmony  with  the  laws  governing  the  grav- 
itation of  matter.  These  atoms  fall,  and  rise,  and  turn  through  a 
changeless  process  of  mechanical  coalescence  and  disintegration,  of 
concussion,  recoil,  and  rotation,  from  which  process  is  evolved  all  that 
has  been,  is,  or  ever  will  be.  In  such  a  universe  there  is  no  room  for 
any  enduring  consciousness,  or  God,  of  any  kind.  If  a  few  gods  are 
irrationally  infused  into  it,  for  the  sake  of  theological  convenience,  as 
is  sometimes  done,  it  seems  that  these  divinities  must  either  be  irrational 
or  powerless.  The  elements  of  matter  must  act  upon  each  other  in 
harmony  with  the  laws  governing  the  material  universe.  But  these 
laws  themselves  must  act  through  mechanical  necessity  with  unvarying 
regularity,  or  be  subject  to  chance,  or  caprice.  If  the  first,  the  gods 
are  powerless;  if  the  second,  irrational;  and  in  either  case,  it  seems  as 
well  to  have  no  gods  as  a  helpless  and  inconsequent  theogony.  This 
is  the  position  recognized  as  the  outcome  of  this  line  of  inquiry  by 
competent  observers.  ^ 

'  Aristotle  Metaph.  V.  S,  1009  b  11;     Laertius  Pyrrho.     VIII.  11.,  pp.  245-352. 

*  Sextus  Empiricus,  Adv.  Physic.  IX.  59;  Cicero,  Dc  Natura  Deorum,  L  12;  Plutarch,  Adv.  Col.  VIII; 
Cf.  Cudworth,  Vol.  I.  pp.  105,  127 


46o  Philosophy  Pt.  IV 

God,  immortality,  knowledge,  reason,  truth,  or  for  that  matter,  any 
conception  of  the  Cosmos  or  humanity,  other  than  as  a  mechanical 
coalescence  and  disintegration  of  indivisible,  material  particles  in  a 
state  of  flux,  generated  by  gravitation,  here  vanish  in  the  void  —  and 
another  island  is  discovered  in  the  speculative  seas.  Thought  can  go 
no  farther  in  this  direction;  progress  ceases.  The  subject  is  incapable 
of  further  analysis,  and  the  ship  of  Reason  puts  into  another  port.  This 
is  the  great  and  scientifically  fortified  island  of  lifeless  matter  and  un- 
conscious motion.  This  is  the  (puacq  aXoyo?  or  the  uXi/,-fj  avayx-rj  of 
speculation;  this  is  the  Democritical  hylopathic  Atheism,  at  which  the 
learned  Doctor  Cudworth  hurled  The  Intellectual  System  of  the  Universe; 
this  is  the  world  of  inert  mass  and  fortuitous  motion,  the  w&v  ir^q  vuxTiq, 
the  "egg  of  the  night,"  laid  by  Democritus  in  the  metaphysical  gardens; 
and  it  is  one  of  the  most  profoundly  reasoned  and  thoroughly  entrenched 
conceptions  of  the  material  universe  ever  conceived.  There  is  no 
escape  from  this  position  along  these  lines  of  inquiry;  the  rational 
mind  has  no  choice  but  to  stay  here  "cribbed,  cabined,  and  confined," 
and  defend  this  island  with  Leucippus  and  Democritus,  or  go  back  to 
the  starting-point  in  search  of  another  method  and  begin  over  again. 

The  philosophic  mind  chose  to  continue  its  quest  and  began  again. 
In  going  back  to  the  starting-point,  the  third  cycle  of  speculative  thought 
is  completed.  This  cycle  has  here  been  called  that  of  the  Metaphysical 
Physicists,  and  has  culminated  again  in  a  purely  materialistic  universe, 
or  in  a  mechanico-atomic  atheism.  This  period  of  thought  extends 
from  about  the  70th  Olympiad  to  the  90th  Olympiad;  approximately 
from  500  B.  C.  to  the  last  decades  of  the  same  century. 

Section  V  —  The  Physical  Metaphysicians 
Article  i — Anaxagoras. 

Zeno,  the  Eleatic,  demonstrates  rationally  that  there  can  be  no  such 
thing  as  motion  —  Diogenes,  the  Cynic,  gets  up  and  walks.  Here  is 
the  fundamental  difficulty  underlying  speculative  inquiry;  the  conflict 
between  rational  cognition  and  sense  perception.  Thought,  which 
satisfies  only  one  of  these  to  the  exclusion  of  the  other,  is,  naturally, 
incapable  of  presenting  a  comprehensive  system.  Systems  which 
satisfy  neither  one  nor  the  other,  such  as  those  of  Pythagoras,  Heraclitus 
and  Empedocles,  form  but  links  in  the  chain  of  development  from  one 
Speculative  position  to  another.    The  problem  before  the  thinking  men 


Bk.  IV  Pre-Socratic  Thought  461 

of  the  period  under  discussion,  was  to  blend  the  dictates  of  the  reason 
with  the  evidence  of  the  senses.  Thought  begins  to  have  a  history 
behind  it;  something  has  been  learned  of  the  necessary  action  of  the 
mind  in  developing  certain  lines  of  inquiry,  and  the  consequence  is 
that  thinkers  of  this  period  are  able  to  avoid  certain  difficulties  and  cur- 
rents of  thought  of  which  the  earlier  inquirers  were  unconscious.  In- 
quiry pursued  along  the  lines  followed  by  the  Eleatics,  in  their  study 
of  the  action  of  the  mind,  is  now  known  to  lead  to  nothing  but  an  is- 
land of  idealistic  ratiocination,  carried  on  independently  of  the  experi- 
mental observation  of  nature,  and  denying  all  validity  to  the  testimony 
of  sense.  On  turning  attention  to  an  analysis  of  matter,  the  thinker 
knows  that  it  is  but  a  question  of  time  until  thought  drifts  upon  the 
materialistic  islands  of  Diogenes  or  Democritus.  Thought  must,  there- 
fore, avoid  these  difficulties  at  present;  and  while  developing  the  dual- 
istic  hypothesis  of  Heraclitus,  there  being  no  other  not  already  exhausted, 
it  must  not  become  involved  in  either  purely  material  or  purely  ideal 
inquiry. 

The  problem,  therefore,  requires  a  new  formulation  of  conceptions 
with  reference  to  both  matter  and  mind.  It  seems  that  earlier  specula- 
tion must  be  in  error  in  its  interpretation  of  matter.  The  flux  of  Hera- 
ditus  must,  of  course,  be  recognized,  but  it  seems  that  this  flux,  or 
motion,  may  be  explained  upon  grounds  other  than  any  yet  developed. 
Things  exist,  it  may  be  said;  the  mass  moves  beneath  the  senses.  This 
change,  or  becoming,  must  be  recognized  if  the  idealistic  abstractions 
of  the  island  of  Zeno  are  to  be  avoided.  Changeable  things,  then, 
flow  from  and  into  each  other.  These  things,  consequently,  must 
have  been  contained  within  the  original  mass,  or  they  would  never 
appear.  Things  must  arise  from  something  or  nothing;  the  second 
is  rationally  and  physically  unthinkable.  Generated  things,  then, 
must  arise  from  things  already  pre-existent  in  the  ultimate  substance. 
But  things  from  which  all  things  are  generated  must  partake  of  the 
nature  of  these,  or  their  generation  would  be  impossible.  Things  of 
this  kind,  which  underlie  changing  phenomena,  might  be  regarded  as 
germinal  essences,  or  seeds,  possessing  in  themselves  potentially  all 
qualities  of  matter  both  external  and  internal;  both  of  the  object  and 
of  the  subject.  Such  seeds,  or  essences,  however,  must  be  regarded 
as  infinitely  di\dsible;  otherwise  the  indi\isible  elements  of  the  Atomists 
will  be  met,  and  their  entire  philosophy  develop.  If  the  ultimate 
mass,  however,  is  regarded  as  consisting  of  such  elements  as  those  con- 


462  Philosophy  Pt.  IV 

ceived,  it  seems  obvious  that  its  original  condition  must  have  been 
one  devoid  of  particular  forms  and  qualities;  although  these  would 
have  existed  in  infinite  potentiality  within  the  primitive  mixture  itself. 
The  question  then  arises:  What  caused  the  separation  which  evidently 
took  place,  in  order  to  account  for  existing  phenomena?  This  prim- 
itive chaos  of  infinite  potentialities,  without  form  or  quality,  must 
be  acted  upon  by  something,  in  order  that  these  potentialities  may 
develop;  a  principle  is  required  to  explain  subsequent  change  and  motion. 
But,  upon  observing  the  material  universe,  change  and  motion  within 
it  seem  directed  to  ends,  or  purposes;  design  is  everywhere  evident; 
things  have  specific  relations  to  each  other;  changes  are  governed  by 
principles  directing  them  to  certain  aims,  or  objects.  In  order,  then,  to 
meet  the  requirements  of  explanation  of  this  orderly  series  of  phenomena 
perceived  on  every  side,  change,  or  motion,  it  seems  should  be  regarded 
as  rational,  or  intelligent;  for  no  other  conception  could  account  for 
a  purposive  process  of  modification.  Change,  or  motion,  therefore, 
should  be  conceived  as  directed  and  controlled  by  an  external  and 
independent  Intelligence,  or  Reason,  acting  upon  the  flux,  or  de- 
velopment of  the  germinal  seeds  of  things,  bringing  them  to  the 
rational  realization  of  the  potentialities  they  possess.  This  con- 
ception of  the  Cosmos  avoids  Atomism  on  one  side,  and  the 
unscientific  logicalities  of  the  Eleatics  on  another.  The  first, 
because  the  infinite  divisibilty  of  the  elements  of  matter  is  recog- 
nized, and  the  elements  of  difference  are  contained  in  potentiality 
within  all  substance;  the  second,  because  change  is  considered  part 
of  Reality  and  controlled  by  Intelligence.  This  is  an  analysis  of 
the  mental  processes  of  Anaxagoras.  It  is  based  upon  the  following 
fragments  as  numbered  by  Diels: 

17- 

The  Greeks  speak  wrongly  of  birth  and  death,  for  nothing  really 
comes  into  being  or  ceases  to  be;  things  are  formed  and  dispersed  from 
existing  matter.  Thus,  more  correctly,  is  birth  but  combination;  and 
death  but  separation. 

I. 

All  things  were  mixed  together,  infinite  in  number  and  infinitely 
minute;  but  in  this  mixture  no  single  thing  could  be  perceived  on  account 
of  this  minuteness.  The  air  and  ether,  both  in  themselves  infinite, 
contained  and  pervaded  everything,  for  they  were  the  greatest  of  all 
in  quantity  and  bulk. 


Bk.  IV  Pre-Socratic  Thought  463 

3- 
Of  the  small  there  is  not  a  least,  but  always  a  less  indefinitely;  for 
it  is  impossible  that  something  existing  should  not  be,  and  thus  of  the 
great  there  will  always  be  a  greater.    The  same  thing  applies  to  the 
small;  although  each  thing  is  itself  in  both  great  and  small. 

4- 

This  being  so,  we  must  believe  that  there  are  many  things  of  many 
kinds  in  all  generate  entities;  the  seeds,  or  germinal  essences  of  all 
things,  with  all  kinds  of  forms,  colours,  and  tastes.  That  men  have 
been  made  of  these,  and  other  living  things  possessing  a  soul.  That 
these  men  have  cities  and  tilled  fields,  as  with  us;  and  sun  and  moon 
and  stars,  and  their  land  brings  forth  many  things  of  all  kinds,  which 
they  gather,  and  upon  the  best  of  which  they  live.  I  have  said  this 
with  reference  to  separation  in  order  to  show  that  it  occurs  not  only 
with  us  but  elsewhere. 

But  before  individual  things  were  separated,  everything  was  mLxed 
together,  and  no  external  or  distinguishing  qualities  could  exist.  This 
was  prevented  by  the  universal  blending  of  everything:  of  the  moist 
and  the  dry,  the  hot  and  the  cold,  the  light  and  the  dark,  and  the  mass 
of  earth  contained,  and  of  the  infinite  number  of  germinal  seeds  infinitely 
different.  And  neither  among  the  other  things  is  any  one  like  any 
other.  And  so  we  must  think  that  all  things  are  contained  in  the  total 
mass. 

8. 

In  a  universe  which  is  One,  things  are  not  absolutely  separated  or 
cut  off  from  each  other,  as  though  with  a  double-edged  ax;  not  even 
the  hot  from  the  cold,  nor  vice  versa. 

6. 

Since  the  great  and  the  small  have  the  same  number  of  parts,  all 
things  will  contain  a  part  of  all  other  things.  It  is  not  possible  for 
things  to  exist  entirely  separately,  but  each  will  contain  a  part  of  all. 
And  since  the  least  cannot  exist,  it  can  neither  be  separated  nor  created 
of  itself;  thus,  as  things  were  in  the  beginning,  are  they  at  present; 
blended  and  combined  with  each  other.  There  are  thus  many  things 
in  everything,  and  of  separate  things  an  equal  number  in  both  the  greater 
and  the  less. 

12. 

Other  things  contain  a  part  of  everything,  but  Intelligence  is  infinite 
and  ruled  by  itself.    It  is  combined  with  nothing,  but  exists  free,  alone, 


464  Philosophy  Pt.  IV 

in  and  for  itself.  If  it  were  not  distinct  and  independent,  but  mixed 
with  other  things,  it  would  partake  of  the  nature  of  all  things;  for  in 
all  a  part  of  all  exists,  as  I  have  shown;  and  things  thus  mixed  with  it 
would  prevent  its  dominion  over  others  and  limit  its  own  free  and  self- 
sufficient  existence.  Intelligence  is  of  all  things  the  subtlest  and  the 
purest;  it  possesses  complete  knowledge  of  all,  and  the  greatest  power. 
Intelligence  controls  everything  that  possesses  life  or  soul,  the  greatest 
and  the  smallest.  It  controlled  the  totality  of  changes  from  the  first. 
At  first  it  began  the  cycle  of  modifications  with  a  small  beginning, 
extended  its  influence  farther,  and  will  extend  it  still  farther.  Intel- 
ligence is  conscious  of  all;  the  united,  the  separate,  and  the  distinct; 
of  all  things  to  be,  all  things  that  were  and  exist  no  longer,  that  are  and 
that  will  be.  Intelligence  controls  and  orders  all,  together  with  the 
movements  of  the  stars,  the  sun,  the  moon,  the  lower  atmosphere  and 
the  higher  ether,  which  are  separate  bodies.  It  is  owing  to  this  suc- 
cession of  changes  that  separation  occurs;  that  the  rare  is  distinguished 
from  the  dense,  the  hot  from  the  cold,  the  light  from  the  dark,  and  the 
dry  from  the  moist.  For  things  are  composed  of  many  parts,  and  Intel- 
ligence alone  is  distinct  and  entirely  separate  from  other  things.  In- 
telligence alone  is  perfectly  homogeneous  in  the  greatest  and  the  smallest; 
nothing  else  is  homogeneous,  but  each  thing  is  that  of  which  it  contains 
predominant  elements. 

13. 
Thus,  when  Intelligence  began  to  generate  motion,  distinctions  grad- 
ually came  into  being  among  the  things  moved;  and  wherever  motion 
was  felt,  qualities  and  distinctions  occurred;  and  through  motion 
and  difference,  themselves,  was  the  cycle  of  change  progressively  in- 
creased. 

IS- 

Things  dense,  moist,  cold  and  dark,  mingled  one  with  another  to 
form  the  earth;  those  of  a  rarer,  warmer,  and  drier  and  cleaner  nature 
united  in  the  composition  of  the  higher  ether. 

16. 

Out  of  things  separated  in  this  way  the  earth  is  formed;  water  is 
separated  from  the  clouds,  and  earth  from  water;  and  by  means  of 
cold,  stones  are  condensed  from  earth,  and  these  are  still  more  distinct 
from  water. 

14- 

But  Intelligence,  as  ever,  and  especially  at  this  point,  is  where  all 


Bk.  IV  Pre-Socratic  Thought  465 

other  things  are  to  be  found;  that  is,  throughout  the  surrounding  mass, 
and  in  things  united  with  it  and  separated  from  it. 

The  position  of  Anaxagoras  is  summarized  in  the  well-known  pas- 
sage in  Laertius:^  All  things  were  mixed  in  confusion.  Intelligence 
came  and  arranged  them. 

A  new  conception  of  the  Cosmos  appears;  a  new  theory  of  matter, 
and  the  first  philosophic  statement  of  an  intelligent  and  incorporeal 
principle  of  motion.  Greek  speculation  of  this  period  presents  ex- 
ceptional elements  of  interest.  It  is  the  first  point  in  its  history  at 
which  it  shows  signs  of  becoming  self-conscious,  of  a  realization  of  the 
two  distinct  processes  in  which  the  human  faculties  move,  and  a  de- 
liberate avoidance  of  both  pure  materialism  and  pure  idealism. 

Atomism  was  in  the  speculative  air,  and  even  Heraclitus  and  Emped- 
ocles  seem  to  have  contemplated^  the  possibility  of  a  more  profound 
analysis  of  matter  than  may  be  found  in  a  primitive  substance  or  the 
four  elements  of  the  Pythagoreans.  It  was  thus,  doubtless,  understood 
at  this  period,  if  analysis  is  pushed  to  a  point  at  which  the  elements 
of  matter  are  regarded  as  indivisible,  that  a  purely  materialistic  and 
mechanical  conception  of  the  universe  ine\itably  results,  as  has  been 
seen.  The  question  hinges  upon  the  divisibility  of  the  elements  of 
matter.  The  action  of  the  mind  of  Anaxagoras  shows  consciousness 
of  this  fact;  and,  in  developing  the  thought  of  Heraclitus,  he  consequently 
branches  out  into  a  path  other  than  that  of  Empedocles,  thus  avoiding 
the  Atomic  rocks  and  starting  inquiry  in  another  direction.  Aristotle,' 
probably  for  this  reason,  places  him  later  in  speculation,  although 
older  than  Empedocles. 

The  two  developments  upon  which  the  philosophic  importance  of 
Anaxagoras  depends  are:  First,  his  conception  of  the  elements  of  matter 
in  the  form  of  germinal  seeds;  axep^iaTa  as  he  called  them.  Second, 
his  introduction  of  Reason,  or  Intelligence,  as  a  cosmic  principle  govern- 
ing motion. 

The  Anaxagorean  theory  of  matter,  while  new  and  ingenious,  is  far 
from  satisfactory.  In  the  first  place,  if  accepted  in  its  strictly  physical 
sense,  the  primitive  condition  of  substance  must  have  been  that  of 
a  single  mixture,  or  homogeneous  mass,  devoid  of  qualities;  a  purely 


« u.  3.  p.  34. 

»  Plutarch  de  Platit.  Phil.  I.  13, 
'  hletaph.  A.  3,  984  a  11. 


466  Philosophy  Pt.  IV 

negative,  and  indefinite  \iiy[ioc,  or  mixture,  as  Aristotle^  points  out, 
which  practically  reproduces  the  vague  Infinite  of  Anaxamander.  If 
now,  with  Anaxagoras  the  properties  of  all  motion  and  difference  are 
regarded  as  existing  in  potentiality  within  this  mLxture,  in  the  form  of 
germs,  or  seeds,  it  seems,  in  order  to  preserve  a  rational  conception  of 
qualities  and  difference,  that  a  point  must  be  reached  at  which  these 
seeds,  or  germs,  will  no  longer  be  divisible.  When  such  a  point  is 
reached,  however,  the  entire  atomic  philosophy  will  result.  Anaxag- 
oras only  avoids  this  by  the  introduction  of  infinite  divisibility  with 
reference  to  his  elements;  but  when  infinity  is  introduced,  explanation 
ceases.  The  mind  cannot  grasp  infinity,  and  the  object  of  philosophic 
inquiry  is  to  find  something  which  the  mind  can  grasp.  The  conse- 
quence is  that  Anaxagoras'  theory  of  matter  has  never  played  an  im- 
portant part  in  speculation,  for  the  reason  that  it  does  not  explain. 

On  the  other  hand,  his  introduction  of  Intelligence,  or  Reason,  as 
the  guiding  principle  of  motion  is  of  importance,  and  forms  the  motive 
power  of  the  next  movement  in  thought.  The  word  Nous,  as  used 
and  defined  by  Anaxagoras,  embraces  in  idea  a  combination  of  the 
words  Spirit,  Intelligence,  and  Reason.  The  presence  of  design  in  the 
modifications  of  matter  forms  the  rational  basis  for  the  introduction 
of  such  a  conception  as  a  cosmological  principle;  and,  unless  it  is  denied, 
that  matter  changes  with  orderly  design  or  law,  in  relation  to  other 
matter,  it  is  not  easy  to  deny  at  this  point  the  possibility  of  the  existence 
of  such  Intelligence  or  Reason.  If  such  design  or  purpose  is  denied, 
however,  the  (fuaiq  aXoyoq,  or  unconscious  mechanism,  of  the  Atomists 
instantly  appears.  The  recognition  of  this  Nous,  Intelligence,  or 
Reason  of  Anaxagoras,  avoids  such  conclusions,  and  supplies  the 
object  of  further  inquiry.  All  other  gates,  it  seems,  are  closed  to 
speculative  thought,  but  the  Nous  of  Anaxagoras  gleams  like  a  light 
in  the  night,  leading  away  from  the  rocks  of  Atomism  and  on  to  hopeful 
discoveries. 

The  thought  of  Anaxagoras,  however,  is  essentially  involved  in  physics. 
He  already  has  the  Eleatic  and  Pythagorean  metaphysics  behind  him, 
and  realizes  the  dangers  of  idealistic  ratiocination  divorced  from  experi- 
mental knowledge  of  nature.  Socrates^  complains  that  Anaxagoras, 
after  raising  hopes  at  the  outset  of  his  exposition  by  the  introduction 
of  Intelligence,  nevertheless,  attempts  the  explanation  of  phenomena  on 

'  Metaph.  A.  8,  989  b  6;    Phys.  T.  4,  203  a  23. 
*  Phatdo.  98  B. 


Bk.  IV  Pre-Socratic  Thought  467 

physical  grounds,  and  only  employs  his  Intelligence  where  all  other 
explanation  fails.  Aristotle^  makes  a  remark  to  the  same  effect.  This 
tendency,  however,  seems  an  unavoidable  feature  of  the  thought  of  the 
period  and  is  required  by  any  system  desiring  to  avoid  Zenonian 
ratiocination  on  one  side,  and  the  atomistic  mechanism  on  another. 

However,  Anaxagoras  has  given  a  new  direction  to  thought,  and 
progress  again  becomes  possible.  Materialistic  speculation  must  be 
avoided,  and  attention  turned  toward  Mind,  or  Reason,  as  the  object 
of  investigation.  The  hypothesis  of  the  new  era  is  that  the  phenomena 
of  nature  may  be  resolved  into  matter  and  Reason,  with  Reason  as 
the  controlling  factor.  Further  progress,  therefore,  must  proceed  to 
an  analysis  of  Reason. 

Article  2 — Protagoras. 

To  say  that  Reason,  or  Intelligence,  controls  everything  is  to  suggest 
much  and  define  little  until  an  explicit  understanding  of  Reason  is  formed. 
As  the  conception  of  a  rational,  or  purposive,  cosmic  principle  acting 
upon  matter  is  studied,  it  seems  that  its  activities  can  take  place  under 
certain  conditions  alone.  Either  Reason  must  be  implied  in  the 
existence  of  matter  or  external  to  it.  If  Reason  is  external  to  matter, 
its  influence  thereon  must  be  adapted  to  certain  ends,  otherwise, 
it  can  have  no  purpose  and  consequently  becomes  irrational.  So 
far  as  philosophy,  or  human  reason,  is  concerned,  it  is  obvious  that 
these  purposes,  or  ends,  must  be  called  specific  and  finite;  they  would 
otherwise  be  incapable  of  realization  within  the  finite  human  conscious- 
ness. These  purposes  of  Reason,  therefore,  must  be  finite  in  order 
to  be  determined,  and  they,  moveover,  must  be  determined  or 
determinable  within  the  content  of  the  human  intelligence;  such  deter- 
mination naturally  involving  the  negation  of  the  infinite.  If  the  other 
supposition  is  adopted,  and  Reason  regarded  as  combined  with  matter, 
or  implied  in  the  existence  of  the  mass  upon  which  it  acts,  the  fore- 
going considerations  are  equally  necessary;  for  Reason,  in  order  to 
determine  itself,  must  act  through  specific  means  for  specific  ends;  and 
as  soon  as  these  ends  are  realized  within  the  human  consciousness  they 
become  necessarily  finite.  These  considerations  seem  implied  in  any 
combination  of  the  foregoing  processes.  If  the  conception  of  an  inde- 
finable Reason,  acting  upon  an  infinite  mass  for  undetermined  ends; 
is  suggested,  philosophy  ceases.    The  one  purpose  of  philosophy  is 

1  Melaph.  A.4,  985  a  18. 


468  Philosophy  Pt.  IV 

rational  realization  within  the  finite  human  consciousness;  for  no  other 
humanly  rational  realization  is  conceivable. 

This  is  an  important  step  in  advance  of  Anaxagoras.  He  suggested 
the  significant  conception  of  Reason  acting  upon  matter,  but  left  Reason 
an  undetermined  quantity.  The  Reason,  or  Nous,  of  Anaxagoras  is  a 
vaguely  conceived,  objective  phenomenon  acting  upon  matter  in  an 
undetermined  way.  It  is  possible  to  formulate  a  more  definite  con- 
ception of  the  process  through  the  foregoing  analysis  of  Reason.  This 
process  must  consist  in  a  definite  sequence  of  finite  means,  consciously 
directed  toward  finite  ends,  capable  of  determination  within  the  human 
mind.  Anaxagoras,  one  might  say,  left  an  objective  Reason  fluttering 
in  the  air,  like  a  butterfly  with  a  broken  wing.  Aristotle^  cites  him  as 
accepting  a  more  or  less  clearly  understood  medium  between  contra- 
dictions, so  that  all  things  might  be  regarded  as  false;  for,  in  a  mixture 
in  which  all  things  are  indiscriminately  blended  and  mingled  one  with 
another,  it  seems  difiicult  to  regard  the  mixture  as  either  good  or  bad; 
or  anything  whatever  as  necessarily  true.  Anaxagoras^  himself  says 
"We  are  not  able  to  judge  of  the  truth  on  account  of  the  feebleness 
of  the  senses."  Thus,  an  analysis  of  the  Anaxagorean  Nous  suggests 
both  the  uncertainty  of  the  testimony  of  the  senses,  and  the  purely 
subjective,  or  relative,  nature  of  Reason.  A  net  has  been  thrown  over 
the  butterfly:  it  cannot  escape.  Nothing  is  gained  in  the  supposition 
that  objective  Reason,  or  Intelligence,  might  realize  itself  in  some  ultra- 
human  consciousness.  Rational  thought  is  necessarily  carried  on 
within  the  limits  of  the  human  mind,  and  lacks  the  power  to  penetrate 
within  any  consciousness  other  than  that  of  the  finite  human  being. 
No  Reason,  or  Intelligence,  therefore,  outside  the  human  reason  or 
intelligence,  possesses  any  significance  in  rationalized  thought  owing 
to  the  conditions  of  its  existence.  The  butterfly  is  now  securely  fastened 
to  the  dissecting  table  and  may  be  examined  at  leisure.  It  turns  out 
to  be  but  an  earthworm  after  all:  it  only  seemed  a  butterfly.  In  any 
event  it  can  never  flutter  again  before  the  eyes  of  a  real  philosopher, 
for  he  knows  now  that  no  Mind,  Reason,  Intelligence,  or  anything  else 
can  possess  any  rational  significance  for  man,  other  than  in  the  con- 
sciousness of  the  human  subject.  This  is  one  of  the  greatest  discoveries 
in  thought. 

The  individual  human  subject  here  becomes  the  final  embodiment  of 

>  Metaph.     7,  1012  a  26. 
*  Frag.  ai. 


Bk.  IV  Pre-Socratic  Thought  469 

Reason,  or  Intelligence;  and  "all  things,"  instead  of  being  referred  to  a 
vague  objective  Reason,  must  be  referred  to  the  concrete  subject.  Rea- 
son, therefore,  or  the  embodiment  of  ultimate  truth,  so  far  as  it  may  be 
determined,  rests  within  each  individual  mind  alone.  Individual  minds 
not  only  diflfer,  however,  but  are  themselves  subject  to  endless  modi- 
fication. There  can,  therefore,  be  no  ultimate  truth,  no  final  Reason 
or  Intelligence,  whatever;  and  man,  the  indi\'idual,  becomes  the  measure 
of  all  things.  In  the  words  of  Protagoras,^  to  whom  is  due  the  philo- 
sophic discovery  of  the  subjectivity  of  human  knowledge:  IlavTwv  xp-q- 
(xattov  [jlItpov  avOpwxoq. 

As  soon  as  the  conception  of  an  objective  truth,  or  Reason,  is  eliminated 
from  inquiry,  it  becomes  evident  that  individual  human  opinion  is  the 
only  thing  with  which  philosophy  has  to  deal;  but,  as  human  opinions 
are  infinitely  different  and  infinitely  variable,  it  is  obvious  that  they 
can  be  considered  but  as  forming  changing  terms  of  changing  relations. 
Hence,  all  opinion  becomes  equally  true  or  equally  false;  or  rather, 
forms  the  terms  of  a  relation,  and  is  in  reality  neither  true  nor  false; 
and  consequently  leads  nowhere. 

The  older  inquirers  idolized  objective  truth  and  devoted  their  en- 
ergies to  its  discovery.  Individual  opinion,  Heraclitus  seems  to  have 
regarded  as  a  disease.-  Protagoras  makes  the  discovery  that  Truth, 
Reason,  Mind,  Intelligence,  or  anything  else,  can  have  no  rational 
existence  outside  the  content  of  the  human  mind;  and,  hence,  is  neces- 
sarily driven  to  exalt  individual  opinion,  on  the  ground  that  no  other 
opinion  is  determinable.  As  self-realization  is  the  one  object  of  philo- 
sophic inquiry;  and,  as  such  inquiry  must  of  necessity  be  carried  on 
within  the  limits  of  the  individual  consciousness;  it  is  obvious  that  all 
objective  conceptions  of  Truth  or  Reason  must  henceforth  be  eliminated 
from  philosophic  investigation.  Since  the  days  of  Protagoras  no  rational 
mind  will  seek  explanation  of  cosmic  phenomena  not  determinable 
within  the  subjective  human  intellect.  Perhaps  the  clearest  single 
expression  of  the  thought  of  Protagoras  is  found  in  Sextus.  He  says^ 
in  distinguishing  the  position  of  Protagoras  from  that  of  Pyrrho: 

"Protagoras  would  establish  man  as  the  measure  of  all  things;  of 
the  existent  that  they  are,  and  of  the  non-existent  that  they  are  not. 
By  measure  he  meant  the  final  criterion,  and  by  things  he  meant  condi- 


'  Laertius,  IX,  8,  p.  239. 

2  Ibid..  XI.  I.  p.  228. 

'  Pyrrh.     Eypot.  i.  32,  p.  94. 


470  Philosophy  Pt,  IV 

tions;  which,  then,  is  to  say  that  man  himself  is  the  final  criterion  of 
all  conditions;  both  of  those  which  are,  that  they  are;  and  of  those 
which  are  not,  that  they  have  no  existence.  For  this  reason  he  recognized 
the  phenomenal  alone,  as  it  appeared  to  each  individual;  and  thus 
established  the  principle  of  relativity.  Protagoras  said  that  man  him- 
self, as  matter,  was  in  a  state  of  flux;  and,  as  the  matter  changes,  it 
necessarily  undergoes  augmentations  and  losses;  and  the  senses  them- 
selves will  thus  be  modified  and  varied  with  age  and  other  physical 
conditions.  He  said  that  the  fundamental  relations  of  all  phenomena 
were  contained  in  essence  in  matter;  so  that  matter  would  simply  be 
to  each  one  as  it  appeared  to  each  one.  Men  perceive  different  things 
at  different  times  in  accordance  \\ith  changing  circumstances.  Who- 
ever is  in  a  normal  condition  perceives  things  as  they  appear  to  the 
normal,  and  vice  versa.  The  same  considerations  apply  to  difference, 
traceable  to  age,  sleep,  wakefulness,  and  all  other  conditions.  Thus 
in  accordance  with  Protagoras,  man,  the  individual,  becomes  the  cri- 
terion of  Being,  or  existence,  for  those  phenomena  which  appear  to 
men  exist;  those  which  appear  to  no  human  intelligence  do  not  exist. 
And  thus  we  see,  in  recognizing  both  the  changing  condition  of  matter, 
and  the  fact  that  it  contains  within  itself  the  relations  of  all  phenomena, 
that  he  shows  that  which  is  invisible  for  us,  and  that  which  may  be 
readily  grasped." 

Protagoras^  seems  to  have  been  a  friend  or  pupil  of  Democritus,  and 
his  thought  is  evidently  much  influenced  by  physical  speculation.  It 
is,  therefore,  of  interest  to  observe  how  identical  conclusions  may  be 
derived  through  the  development  of  purely  idealistic  inquiry.  Gorgias 
was  a  follower  of  the  idealistic  Eleatic  school,  and  presents  the  follow- 
ing position  2  divorced  from  all  physical  considerations. 

Article  5  —  Gorgias. 

In  his  writings  with  reference  to  nature  and  non-existence,  Gorgias 
laid  down  in  order  under  three  headings:  First,  that  nothing  exists. 
Second,  that  if  something  did  exist  it  would  be  unintelligible  to  the 
human  being.  Third,  that  if  anything  existed  and  could  be  understood, 
it  could  not  be  demonstrated  or  explained  to  others. 

I.  That  nothing  exists,  he  demonstrated  as  follows:  If  anything 
existed  in  reality,   it  must  be  that  which  exists,  that  which  does  not 

>  Laertius,  IX.,  8. 

'  Aristotle  De  Xenophane,  etc.,  s.6;  and  Sextus,  Adv.  Logic.     VII,  65.  p.  285. 


Bk.  IV  Pre-Socratic  Thought  471 

exist,  or  a  combination  of  the  two.  But  ultimate  Truth,  or  real  ex- 
istence, cannot  be  regarded  as  either  non-existent  or  as  a  combination 
of  existence  and  non-existence  without  a  contradiction  of  terms.  These 
suppositions,  therefore,  must  be  eliminated;  and  Truth,  or  existence, 
regarded  as  that  which  exists.  Existence,  or  truth,  if  existing,  will 
be  either  eternal,  generated,  or  again  a  combination  of  the  two. 

Existence  is  not  eternal:  For  without  origin  or  beginning,  it  would 
be  infinite;  if  infinite,  it  is  nowhere;  for  it  could  not  be  in  anything  else, 
as  nothing  is  larger  than  it;  nor  could  it  be  in  itself,  for  upon  such  a 
supposition  it  would  be  both  object  and  surrounding  space,  both  body 
and  place,  which  is  absurd.  That  which  exists,  therefore,  cannot 
exist  in  itself  without  being  eternal;  if  eternal,  it  is  infinite;  if  infinite 
it  exists  nowhere;  if  nowhere  it  does  not  exist  at  all. 

Existence  is  not  generated:  If  generated,  it  must  owe  its  birth  either 
to  existence  or  to  non-existence;  but  the  first  is  impossible,  for  if  it 
exists  pre\ious  to  its  own  generation,  it  is  not  generated.  Existence 
cannot  arise  from  non-existence;  for  that  which  does  not  exist  can 
obviously  generate  nothing.  Nor  can  Existence  be  simultaneously 
generate  and  eternal;  such  a  supposition  involves  a  contradiction  of 
terms.  Ultimate  Truth,  therefore,  or  real  Existence,  does  not  exist  at 
all. 

II.  If  Existence,  or  Truth,  did  exist,  it  must  be  incomprehensible 
and  imknown  to  man:  If  Existence  is  not  in  thought  and  reason,  it 
is  obviously  unthinkable  and  unreasonable;  and  consequently  unknow- 
able and  incomprehensible.  If  thought  did  not  exist,  however,  how 
could  Existence  be  thought?  If  Existence,  or  Truth,  therefore,  exists 
at  all,  it  must  exist  in  thought.  But  it  is  obvious  that  all  which  is 
thought,  is  not  existence  itself;  for  were  such  the  case,  everything  we 
think  would  necessarily  exist;  such  as  winged  men,  or  chariots  rolling 
on  the  seas;  that  which  is  thought  is,  therefore,  not  necessarily  Truth, 
or  Existence,  itself.  From  which  it  appears  that  if  thought  itself  is 
not  Truth,  or  that  which  really  exists,  that  which  does  not  exist  cannot 
be  thought.  Contraries  correspond  to  contraries.  Existence  is  con- 
trary to  non-Existence.  If  Existence  is  thought,  non-Existence  cannot 
be  thought.  Thus  as  we  conclude  finally  and  without  appeal  from  the 
evidence  of  the  senses,  that  the  audible  and  the  visible  exist;  if  thought 
itself  is  the  criterion  of  Truth,  we  should  in  the  same  way  conclude  that 
all  which  is  thought  exists;  and,  consequently,  recognize  the  existence 
of  winged  men,  monsters,  and  chimera,  the  moment  we  think  of  them; 


472  Philosophy  Pt.  IV 

which  is  absurd.  Existence,  therefore,  or  uhimate  Truth,  is  neither 
to  be  thought  nor  comprehended. 

III.  If  we  supposed  that  Existence  were  comprehended  by  any  one, 
it  would  be  inexpHcable  to  others:  If  we  suppose  the  object  of  compre- 
hension to  be  perceptible  to  the  senses,  it  is  obvious  that  that  which  is  heard 
must  be  explained  by  hearing;  that  which  is  seen  must  be  explained  by 
sight,  and  so  on,  and  not  crosswise  —  that  is,  that  which  is  evident 
to  sight,  cannot  be  understood  by  hearing,  and  so  on.  But  even  though 
we  suppose  that  we  understand  by  means  of  the  senses,  we  must  of 
necessity  communicate  through  words.  But  words  are  neither  the 
object  to  be  explained,  nor  do  they  constitute  real  Existence.  Words 
are  capable  of  communicating  nothing  but  words;  beside  which  external 
objects  have  no  more  relation  to  words  than  the  visible  has  to  the  sense 
of  hearing,  or  sight  to  a  perception  of  the  taste.  Yet,  nevertheless, 
how  can  we  communicate  except  through  the  media  of  words?  If 
it  is  suggested  that  words  may  be  arranged  to  express  the  object  per- 
ceived, it  may  be  replied  that  the  words  do  not  express  the  object; 
the  object  on  the  contrary,  suggesting  the  words.  But  words  themselves 
and  their  sequences  are  external,  objective  phenomena,  as  well  as  other 
objects  of  perception;  and  as  such,  essentially  distinct  from  other  ex- 
ternal objects;  and,  on  account  of  this  distinction,  are  no  more  capable 
of  communicating  the  true  nature  of  these  than  the  objects  themselves 
could  communicate  their  own  nature  to  each  other." 

Metrodorus  of  Chios  put  the  final  touch  to  the  thought  of  this  period 
when  he  said,^  "We  know  nothing;  not  even  that  we  know  nothing." 

The  conventional  method  of  meeting  the  arguments  of  Protagoras 
and  Gorgias  by  means  of  the  single  word  "sophistry"  is  not  impressive  in 
a  philosophic  sense.  On  the  contrary,  these  positions  present  conclusions 
of  rational  intellects  moving  with  perfect  accuracy.  At  this  period  of 
inquiry  the  intelligence  acted  with  the  Atomists  and  the  Sophists,  or 
it  did  not  act  at  all;  if  it  reasoned,  it  reasoned  with  them. 

The  shores  of  another  island  here  loom  on  the  horizon.  When  the 
speculative  significance  of  the  subjectivity,  or  relativity,  of  human 
knowledge  is  appreciated;  and  when  it  is  understood  that  no  truth, 
or  existence,  can  be  rationally  conceived  other  than  within  the  finite 
human  consciousness;  it  seems  as  though  cloud,  or  shadow  of  truth,  had 
lifted  from  the  mind.  For  this  reason  the  inhabitants  of  this  island 
call    it  the  island  of    'Enlightenment";    others  call  it  the  island  of 

»  Sextus.    Adv.  Math.  VII.  88,  p.  agi. 


Bk.  IV  Pre-Socratic  Thought  47^ 

"Sophistry,"  for  here  are  met  Protagoras,  Prodicus,  Hippias,  and 
Gorgias. 

But  one  other  school  of  thinkers,  that  of  the  Atomists,  has  been  as 
much  misrepresented  as  that  of  the  Sophists.  The  fact  that  they 
denied  both  the  utility  and  the  possibility  of  philosophy  led  them  to 
turn  to  practical  affairs,  and  to  produce  but  few  speculative  writings. 
Their  school,  however,  was  a  logical  necessity  in  the  development  of 
thought;  and  represents  the  idealistic  pole  corresponding  to  the  pure 
materialism  of  the  Atomists  on  another  side.  It  represents  the  results 
of  inquiry  turned  toward  an  analysis  of  the  phenomena  of  mind,  rather 
than  to  that  of  the  phenomena  of  matter.  As  this  position  is  studied, 
its  importance  becomes  more  evident.  The  contemplation  of  the  merely 
relative  nature  of  human  knowledge,  the  constant  flux  of  matter,  from 
which  sense  and  reason  arise;  the  consequent  relativity,  variability, 
and  uncertainty  of  human  opinion  in  all  its  forms,  lead  to  a  reasoned 
disbelief;  not  only  in  the  existence  of  ultimate  Truth,  discoverable 
through  the  testimony  of  the  senses,  as  in  the  first  cycle  of  idealistic 
thought,  but  to  a  reasoned  disbelief  in  the  human  Reason  itself.  It 
leads  to  the  denial  of  the  validity  of  both  sense  and  reason,  upon  per- 
fectly rational  grounds. 

This  island  of  Sophistry  is  an  important  position  in  the  speculative 
seas  and  presents  for  the  first  time  a  completely  reasoned  crisis  in  thought. 
It  is  useless  to  return  to  the  starting-point  at  this  juncture  in  order 
to  begin  again ;  the  Reason  here  repudiates  itself  and  philosophy  ceases. 
Rational  men  adopt  the  Atomic  or  the  Sophistical  position.  There  is 
nothing  else  to  do  —  speculative  momentum  is  spent. 

When  man  first  began  to  reason  with  reference  to  the  problems 
of  Nature,  he  resolved  the  universe  into  matter,  sought  its  ultimate 
principle,  and  on  reaching  the  hylozoism  of  the  lonians  with  Anaximenes 
and  Diogenes,  he  discovered  what  seemed  to  be  the  simplest  principle 
of  substance,  and  with  this  discovery  his  h3^othesis  exhausts  itself. 
He  goes  back  to  the  starting-point  and  begins  again;  this  time  resolving 
the  universe  into  a  rational  abstraction.  He  analyzes  this  abstraction 
and  discovers  its  ultimate  principle  to  be  Reason  divorced  from  sense. 
He  thus  exhausts  another  hypothesis  and  is  compelled  to  deny  the 
evidence  of  the  senses,  in  order  to  support  this  purely  idealistic  ab- 
straction. This  position,  however,  presents  no  intelligible  explanation 
of  change  and  movement,  and  consequently  he  goes  back  to  the  starting- 
point  once  more,  resolves  the  universe  into  a  combination  of  matter 


474  Philosophy  Pt.  IV 

and  reason,  and  reduces  it  to  a  fortuitously  moved  mechanism.  This 
result  not  proving  satisfactory,  he  begins  yet  again;  this  time  regard- 
ing reason  as  the  guiding  principle  of  the  combination;  and  finally 
reduces  the  universe  and  himself  to  an  aimless  and  kaleidoscopic  series 
of  impressions,  any  one  of  which  as  valid  as  any  other.  If  he  tries 
to  begin  again  at  this  point,  however,  he  will  find  it  impossible;  at  the 
starting  point  are  to  be  found  nothing  but  the  abandoned  wrecks  of 
exhausted  hypothesis;  there  is  not  a  sea- worthy  craft  afloat.  There  is 
apparently  nothing  but  matter  and  mind  into  which  the  Cosmos  may 
be  rationally  resolved,  and  both  of  these  have  now  been  exhausted, 
with  all  their  combinations.  The  reason  is  forced  to  accept  the  (fuaiq 
(ScXoyo?  of  the  Atomists  on  one  side,  or  deny  the  possibility  of  rational 
speculation  and  ultimate  Truth  with  the  Sophists,  on  another.  The  ra- 
tional intelhgence  has  no  choice;  it  either  accepts  these  positions 
or  it  does  not:  In  either  event,  it  ceases  to  act;  the  Reason  here  develops 
the  scientific  basis  of  its  own  negation  for  the  first  time,  and  can 
move  no  more.  This  movement  of  thought  is  carried  on  along  lines 
almost  parallel  with  the  cycle  that  culminated  in  Atomism;  the  crisis 
occurs  simultaneously  in  both  physical  and  metaphysical  speculation. 
Philosophy  is  dead. 


CHAPTER  II 

ATTIC  PHILOSOPHY 

Section  I — Socrates.  Section  II — The  Socratic  Schools.  Section 
III  —  Plato.  Section  IV  —  Aristotle.  Section  V  —  Epicurus. 
Section  VI  —  Zeno,  the  Stoic.    Section  VII  —  Pyrrho. 


Section  I  — Socrates 

TO  OPEN  a  new  era  in  thought  at  this  period  seems  impossible. 
The  rational  thinker  knows  that  intellectual  movement  has 
ceased,  and  sinks  into  a  fatalistic  materialism  with  Democritus 
or  abandons  inquiry  with  Protagoras.  Atomism  or  Skep- 
ticism: there  is  nothing  else.  To  open  a  new  era  requires  the  shaking  of 
the  foundations  of  these  fortresses;  it  requires  what  might  be  called  a 
speculative  earthquake.  To  shake  men's  confidence  in  accepted  opinion 
is  the  work  of  a  tyro,  and  merely  intensifies  Skepticism:  to  shake  men's 
confidence  in  scientifically  reasoned  Skepticism  is  the  work  of  an  intel- 
lectual giant  such  as  the  world  has  seldom  seen.  The  giant  appeared; 
his  name  was  Socrates. 

The  trained  speculative  intellect,  in  meeting  a  system  of  thought, 
wastes  no  time  in  contemplation  of  superstructure  until  it  has  examined 
the  foundations  upon  which  these  are  reared.  It  sinks  at  once  to  the 
underlying  sources  from  which  conclusions  are  derived;  in  other  words, 
to  the  theory  of  knowledge  lying  at  the  base  of  rational  thought.  This 
is  the  point  at  which  the  equipped  inquirer  concentrates  attention  at 
once. 

The  Atomists  based  their  knowledge  upon  impressions  derived  from 
nature  through  the  senses;  the  Sophists  regarded  knowledge  as  limited  to 
individual  opinion.  In  the  Theaetetus,  Socrates  formulates  and  ana- 
lyzes these  and  all  other  then  existing  conceptions  of  knowledge  under 
the  following  headings: 

I.  Sense  Perception. 
XI.  True  Opinion. 

475 


476  Philosophy  Pt.  IV 

III.  True  Opinion,  with  rational  explanation  by  means  of: 

a.        Speech 

^.        Description  through  Elements 

Y-  Relative  Distinction, 
I.  Sense  Perception.  IldvTa  xi>>gzi,  "all  things  move,"  say  the  Atom- 
ists  and  the  Sophists  with  Heraclitus.  All  things  are  in  a  state  of  flux; 
and  there  is  no  knowledge  other  than  human  knowledge.  Again,  human 
knowledge  and  opinion  present  infinite  degrees  of  difference  and,  conse- 
quently, that  which  appears  to  each  is  to  each.  Thus  knowledge  is 
merely  that  which  each  man  perceives,  and,  therefore,  the  sense 
perception  of  the  individual  must  be  regarded  as  knowledge  and  as  the 
measure  of  all  things. 

"But,"  says  Socrates,^  adopting  the  same  point  of  departure,  xdcvTa 
xwpsc,  "all  things  move,"  means  literally  that  all  things  are  always  mov- 
ing with  all  kinds  of  motion.  Thus  the  individual  percipient  subject,  or 
man,  must  be  regarded  with  all  things  else  as  always  moving  with  all 
kinds  of  motion.  Those,  therefore,  who  regard  man  as  the  measure,  will 
necessarily  adopt  a  standard  which  itself  is  constantly  changing;  and, 
as  it  is  impossible  to  measure  anything  with  a  constantly  varying  stand- 
ard, individual  sense  perception  can  never  constitute  the  criterion  of 
truth  or  real  knowledge. 

II.    True  Opinion.    The  entire  administration  of  the  tribunals  of 

justice  refutes  this  position;  says  Socrates,^  for  if  those  who  administer 
those  tribunals  are  regarded  as  doing  so  correctly,  they  can  alone  do  so 
in  accordance  with  the  pleading  and  testimony  of  others,  in  connexion 
with  things  and  events  of  which  they  themselves  neither  have,  nor  pre- 
tend to  have,  any  personal  knowledge.  Their  opinion,  therefore,  if  true, 
can  be  nothing  but  the  result  of  the  testimony  or  the  pursuasion  of 
others.  True  opinion  and  Knowledge,  therefore,  may  in  no  sense  be 
regarded  as  identical. 

III.  True  Opinion  with  rational  explanation.^  Three  conceptions  may 
be  formed  with  reference  to  the  meaning  of  the  words  "rational  explana- 
tion." a,  They  may  mean  explanation  or  elaboration  of  a  subject 
through  the  voice,  or  words.  ^,  They  may  mean  explanation  of  a  thing 
through  the  elements  of  which  it  consists,  or,  y,  through  distinctions 
established  in  relation  to  other  things. 


>  Theaetetus,  181-183. 
'Ibid.,  201  A. 

>  Ibid.,  201  D,  et  seg. 


Bk.  IV  Attic  Philosophy  477 

Speech:  If  speech  is  meant,  nothing  is  added  to  the  original  concep- 
tion of  true  opinion ;  for  all  but  the  deaf  and  dumb  are  able  to  formulate 
their  opinions  through  the  medium  of  words;  and  means  of  articulate 
communication,  as  the  necessary  conditions  of  its  expression,  can  never 
be  regarded  as  distinct  from  true  opinion. 

Explanation  through  elements:  If  this  is  meant  by  explanation,  a 
thorough  knowledge  of  all  elements  is  implied.  But  as  things  are  infinite 
in  number,  and  their  elements  consequently  infinitely  infinite,  true  opinion 
may  in  some  cases  be  accompanied  by  knowledge  of  elements,  in  others 
not.  This  position,  therefore,  must  be  regarded  as  falling  short  of  true 
knowledge. 

Relative  distinctions:  If  relative  distinctions  are  meant,  if  true  opinion 
means  the  understanding  of  that  which  a  thing  has  in  common  with 
others;  but  knowledge,  as  combining  this  true  opinion  ■\\dth  the  per- 
ception of  its  particular  and  distinctive  relations,  nothing  in  reality 
is  said;  for  the  follo^^ing  reason.  True  opinion,  itself,  must  imply 
familiarity  with  the  characteristic  attributes  of  an  object;  and  such 
a  qualification  of  true  opinion  as  is  represented  in  relative  distinc- 
tions, as  an  adjunct  to  it,  is  redundant  and  meaningless;  for  no 
true  opinion  whatever  could  exist  without  necessarily  involving  such 
distinctions. 

Socrates,  therefore,  brings  his  investigation  of  the  nature  of  Knowl- 
edge to  a  close  with  the  following  words: 

"It  is  utterly  futile,  in  our  search  for  Knowledge,  to  say  that  it  is  true 
opinion  with  knowledge  of  distinctions  or  anything  else;  for  not  in  senses 
perception,  O  Theaetetus,  nor  in  true  opinion  combined  with  rational 
explanation  is  Knowledge.  .  .  .  And  does  not  our  art  in  conse- 
quence declare  that  all  the  results  of  our  efforts  have  turned  out  but 
windy  futilities  unworthy  of  being  fostered." 

In  the  Theaetetus,  and  in  other  works,  Socrates  has  demonstrated  this 
statement  to  the  last  degree  of  refinement.  Socrates  asks  the  most 
momentous  question  of  thought;  a  question  never  asked  before  and 
consequently  never  answered;  what  is  Knowledge?  In  asking  this 
question  Socrates  overthrows  or  undermines  every  existing  theory  with 
reference  to  it.  This  is  the  speculative  earthquake  which  alone  would 
introduce  a  new  philosophic  era.  This  is  not  Sophistry  properly  speak- 
ing; this,  if  the  term  is  permissible,  is  the  out  sophisticization  of  Soph- 
istry on  its  own  grounds.  Sophistry  denies  the  possibility  of  the 
discovery  of  ultimate  Truth,  or  real  Knowledge.     Socrates  denies  the 


478  Philosophy  Pt.  IV 

validity  of  the  denial;  and  undermines  the  theories  of  cognition  upon 
which  it  is  based. 

The  rational  thinkers,  aground,  so  to  say,  on  the  islands  of  Atomism  and 
Sophistry,  find  these  positions  established  upon  certain  assumptions 
udth  reference  to  that  which  constitutes  Knowledge ;  in  other  words,  with 
reference  to  the  nature  of  the  action  of  their  own  faculties.  These  men 
not  only  find  their  assumptions  challenged,  but  overthrown;  they  become 
either  no  longer  tenable  or  require  analysis  and  reformulation.  All 
thought  is  superficial  until  the  theory  of  Knowledge  upon  which  it  is 
based-'is  determined.  There  is  no  more  pregnant  philosophic  question 
than  that  for  which  Socrates  stands  in  the  history  of  thought.  What  is 
Knowledge?  And,  when  it  is  distinctly  shown  that  it  must  be  something 
other  than  any  conception  yet  formulated,  its  stimulating  influence  is 
irresistible.  "Philosophy,"  says  Socrates,^  "begins  with  wonder."  The 
man  who  could  inspire  men  with  wonder  once  more  was  the  man  who 
could  revivify  philosophy,  and  the  way  to  make  men  wonder  was  to 
shake  the  foundations  —  not  of  their  opinions,  but  of  their  doubts.  To 
shake  the  foundations  of  opinion,  creates  skepticism;  to  shake  the  foun- 
dations of  skepticism,  creates  wonder  —  that  is,  the  beginnings  of  philos- 
ophy. It  becomes  necessary  to  establish  a  new  theory  of  Knowledge  or 
reformulate  the  old,  if  only  to  withstand  the  scrutiny  of  this  unresting 
intellect.  It  becomes  necessary  to  defend  positions  never  before  ques- 
tioned, and  their  mere  defence  requires  clearer  definition  and  conceptions; 
more  exact  statement,  analysis,  and  classification.  The  mind  of  man 
begins  to  stir  again;  philosophy  breathes  the  stimulating  ether  of  new 
ideas ;  her  eyes  open  in  a  new  world ;  and  the  Reason  moves  once  more. 

The  intellectual  pedigree  of  nearly  all  mental  manifestations  is  usually 
easily  traceable;  the  majority  of  intellectual  phenomena  may  be  clas- 
sified almost  as  easily  as  a  familiar  beetle  or  the  commoner  vertebrates. 
In  attempting  to  do  this  with  Socrates,  however,  the  material  presented 
for  analysis  is  singularly  illusive.  Instead  of  the  customary  combination 
or  variation  of  existing  conceptions  with  its  predetermined  outcome, 
Socrates  seems  like  an  intellectual  dynamo  generating  speculative 
momentum  independently  of  surrounding  influences.  From  the  mind  of 
Socrates  sprang  a  speculative  force  at  once  destructive  and  generative; 
consuming,  as  it  were,  existing  speculative  theories  in  its  path,  yet,  at 
the  same  time,  radiating  pregnant  speculative  ideas  in  all  directions. 
Knowledge,  Truth,  the  Good,  Virtue,  God,  Justice,  the  Soul,  Immor- 

1  Theaeielus,  iss  D. 


Bk.  IV  Attic  Philosophy  479 

tality,  the  State,  Law,  the  True,  the  Beautiful,  Morals,  Intuition, 
innate  Ideas,  Conscience,  Definition,  Genera.  Are  Virtue  and  Knowl- 
edge identical?  Can  Virtue  be  taught?  And  above  all.  Ethics  and  a  self- 
conscious  method  of  inquiry.  Until  the  appearance  of  Socrates,  men  had 
devoted  their  efforts  to  the  penetration  of  the  depths  of  external  nature; 
Socrates  turned  his  efforts  to  the  penetration  of  the  depths  which  lay 
within  himself.  This  is  the  key  of  Post-Socratic  philosophy;  the  essen- 
tial distinction  between  earlier  and  later  Hellenic  thought.  Socrates 
despaired^  of  the  results  of  speculation  into  the  nature  of  the  universe 
and  dissuaded  men  from  such  inquiry;  he  regarded  it  as  lying  beyond  the 
range  of  the  human  intelligence.  On  the  other  hand,  he  discovered  a 
whole  world  of  human  nature  never  before  studied,  never  explored;  as 
Cicero  says^  he  brought  philosophy  down  from  the  heavens  to  the  earth. 

Aristotle,^  with  his  usual  discrimination,  points  out  Socrates'  chief 
contribution  to  thought.  It  is  a  consciously  formulated  method  of 
inquir}'-;  a  method  which  resolves  itself  into  the  establishment  of  generic 
conceptions  and  a  process  of  inductive  reasoning  based  upon  these. 

The  insufficiency  of  earlier  methods  is  made  manifest;  it  seems  as 
though  the  "ancients,"  as  Aristotle  calls  them,  had  proceeded  in  a  dream, 
unconscious  not  only  of  what  they  were  doing,  but  of  their  very  methods 
of  procedure.  At  last,  however.  Philosophy's  eyes  are  opened;  she  is 
now  awake,  as  it  were,  and  conscious  of  the  course  to  be  followed  in 
future  investigation.  The  good  ship  Reason  finds  herself  once  again 
provisioned  for  a  promising  voyage.  She  tugs  at  her  chains  of  atoms 
and  relativity;  her  sails  swell  wdth  the  freshening  breeze.  Socrates  has 
done  his  work  like  a  man,  or  rather  like  a  god,  and  waves  a  smiling  fare- 
well as  he  puts  the  hemlock  to  his  lips.  The  good  ship  Reason  stirs 
and  moves  and  men  study  the  stars  once  more. 

Section  II  —  The  Socratic  Schools 
Article  i — Introduction. 

Starting  once  more  with  a  new  speculative  method  at  this  point,  com- 
pletes the  fourth  cycle  of  philosophic  thought;  four  complete  rings  are 
here  left  behind  which  have  produced  nothing  but  Atomism  and  Skep- 
ticism.   The  Reason  rejects  these  and  begins  again. 


«  Phacdo,  96  C;    Xenof  hon  Mem.  I.  i.  p.  6.;  IV.  7,  p.  191. 
«  Tusc.  Disp.  v.  4,  P-  48. 
»  Metaph.  M.  4,  1078  b  27. 


48o  Philosophy  Pt.  IV 

In  a  study  of  rational  thought  from  this  point,  two  facts  should  be 
borne  in  mind.  First,  philosophy  now  has  a  history  behind  it;  intellect- 
ual processes  have  been  formed,  developed,  and  analyzed  by  men  of  the 
highest  ability.  With  any  given  hypothesis,  as  a  point  of  departure, 
the  necessary  sequence  of  ideas  through  which  a  rational  process  must 
lead  are  now  know-n.  Second,  two  discoveries  of  the  j&rst  importance 
have  been  made  in  the  hitherto  unknown  seas  of  speculation.  The  rocks 
of  materialistic  Atomism,  based  on  sense  perception  on  one  side;  and  the 
barren  shoals  of  idealistic,  subjective  opinion  on  another.  The  philos- 
opher no  longer  sails  his  craft  without  a  chart  to  guide  him.  He  now  has 
an  exact  knowledge  of  the  situation  of  these  rocks  and  barren  shoals,  two 
on  one  side,  and  two  on  another,  which  he  must  avoid  if  he  wishes  to  get 
anywhere  else.  He  has  also  a  chart  of  the  currents  of  thought  which  sweep 
resistlessly  toward  these  islands.  Once  his  ship  is  caught  in  any  of  these 
currents,  the  philosopher  knows  that  he  can  never  disentangle  her,  and 
that  he  must  sooner  or  later  find  himself  wrecked  or  stranded  again. 
Speculative  na\igation  is  here  becoming  an  exact  science;  the  thinker  no 
longer  drones  semi-consciously  through  unknown  waters,  but  looks 
clearly  at  the  seas,  and  the  islands  of  rocks  and  shoals  on  either  side. 
The  master  of  a  speculative  vessel  at  present  knows  what  he  is  doing, 
and  lays  his  course  with  his  eyes  open. 

The  Socratic  convulsion  in  thought  requires  a  thorough  reorganiza- 
tion of  existing  schools  and  theories  of  knowledge.  The  first  impression 
seems  one  of  bewilderment.  Everything  considered  established  is  over- 
thrown; new  problems  are  proposed,  a  new  method  of  inquiry  suggested, 
and  its  validity  rationally  demonstrated.  The  first  question,  therefore, 
is  the  relation  of  the  old  discoveries  to  the  new.  Philosophy  is  exact, 
specific,  articulate,  or  ceases  to  be  philosophy. 

As  is  inevitable  in  any  great  speculative  discovery,  such  as  a  new 
method,  the  discovery  will  be  available  for  a  great  variety  of  purposes. 
Some  inquirers  may  think,  after  the  first  glamour  has  cleared,  that  the 
new  method  strengthens  existing  positions.  Other  inquirers  will  adopt  a 
different  point  of  view,  and  believe  that  none  of  the  ideas  scattered  by 
Socrates  with  such  prodigality  had  been  properly  analyzed  and  form- 
ulated. To  these  thinkers  such  words  as  Knowledge,  the  Good,  Virtue 
offer  new  stimulus  to  thought.  These  are  the  men  who  leave  the  islands, 
go  back  to  the  starting-point,  and  form  the  crews  and  captains  of  new 
speculative  expeditions.  Socrates  gathered  all  the  elements  of  thought 
within  himself  and  set  them  all  free  in  different  directions.    He  gathered 


Bk.  IV  Attic  Philosophy  481 

them,  as  it  were,  from  an  external  objective  nature  and  set  them  free,  to 
use  a  simile  of  his  own,  ^  like  a  covey  of  doves  within  the  human  intellig- 
ence itself.  He  can  think  exactly  as  a  Sophist;  he  knows  the  inner  work- 
ings of  the  atomic  intellect  and  shows  the  foundations  of  both  systems 
to  be  dubious  to  say  the  least.  Inquiry  from  Thales  to  Protagoras  had 
looked  upon  the  "sum  of  things"  as  an  external  objective  phenomenon, 
the  riddle  of  which  it  was  its  object  to  cut  open  or  lay  bare,  in  order  to 
discover  its  essential  nature.  The  great  discovery  of  Protagoras  shows 
that  such  a  process  is  impossible  and  inconceivable;  and  even  were  it 
possible  or  conceivable,  it  must  of  necessity  involve  formulation  or 
expression  within  the  limits  of  the  subjective  human  intelHgence.  The 
object  of  all  inquiry  is  the  discovery  of  Truth,  but  since  the  days  of 
Protagoras  no  rational  mind  will  seek  an  objective  truth;  it  will  never 
look  for  the  heavens  to  open  and  reveal  themselves;  in  other  words,  it 
will  look  for  truth  where  it  knows  truth  can  alone  be  found:  within  the 
content  of  its  own  consciousness.  Thus,  before  Socrates,  men  had 
sought  for  truth  in  an  analysis  of  the  phenomena  of  external  nature; 
after  Socrates,  men  seek  for  truth  in  analysis  of  the  phenomena  of  the 
reflecting  human  intellect.  When  this  distinction  is  ignored,  the  mind 
reverts  to  Pre-Socratic  methods  and  will  be  caught  in  already  exploited 
processes.  Post-Socratic  thought,  however,  overlies  and  includes  earlier 
inquiry. 

It  may  be  said,  that  the  words  "The  True,"  "The  Good,"  and  "Vir- 
tue," form  the  centres  round  which  the  three  Socratic  schools  revolve. 
The  Megarians  turned  their  attention  to  a  study  of  the  first,  the  Cy- 
renaics  to  the  second,  and  the  Cynics  to  the  third.  Socrates  in  showing 
the  superficiality  of  the  finite  end,  or  subjective  opinion  of  the  Sophists, 
put  the  rational  and  subjective  investigation  of  Truth  in  its  place.  The 
Socratic  Truth  thus  absorbs  and  transcends  individual  opinion.  It 
becomes  an  objective  Realty  which  exists  within  the  human  conscious- 
ness; what  is  this  Realty,  this  Socratic  Truth,  ask  the  Megarians. 

Article  2  —  The  Megarians. 

There  are  three  sources  from  which  the  opinions  of  the  Megarian  school 
may  be  derived:  Plato  seems  to  refer  to  them  in  the  Sophist,  the  Lives 
of  Laertius,  and  Aristocles  in  Eusebius.  The  most  suggestive  passage 
is  perhaps  in  the  Life  of  Stilpo,^  in  which  he  says:    "Not  that  which  I 

>  Theaetetus,  197  D. 
'  Lairtius,  II.  11,  p.  61. 


482  Philosophy  Pt.  IV 

see  before  me  is  a  vegetable,  for  a  vegetable  existed  thousands  of  years 
ago;  this  object,  therefore,  which  the  sense  perceives  is  not  a  vegetable," 
This  is  the  key  to  the  doctrine  of  the  Megarians.  The  key  to  the  under- 
standing of  their  answer  to  the  question:  What  is  the  True? 

In  the  passage  in  Plato,  ^  which  apparently  refers  to  the  Megarians,  he 
speaks  of  a  school  diametrically  opposed  to  that  of  the  materialists.  This 
school  seeks  reality  in  "a  superior  and  invisible  region  of  purely  ration- 
alized and  incorporial  forms,"  reducing  all  material  phenomena  to  mere 
dust  by  their  reasonings,  and  lending  them  but  a  perpetual  process  of 
change  for  arriving  at  that  condition. 

Laertius^  says  that  Euclides,  who  formed  the  school  of  Megara,  was  a 
close  student  of  Parmenides;  and  Aristocles^  groups  the  Megarians 
with  the  Eleatics  in  the  recognition  of  unity  in  true  Being  alone  and  the 
denial  of  the  existence  of  anything  else.  The  answer,  therefore,  given 
by  the  Megarians  to  the  question,  What  is  the  True,  is  that  the  True 
consists  in  that  generic  abstraction  in  which  all  particulars  are  con- 
tained. To  this  generic  conception  alone  can  any  real  permanence,  or 
existence,  be  accorded;  for  the  particular,  sensible  forms  from  which 
such  a  conception  is  derived  merely  flow  beneath  the  senses  and  vanish. 
It  is,  consequently,  only  as  the  mind  forms  and  understands  these  generic 
groups  that  it  is  capable  of  coming  in  contact  with  Reality,  or  the  True. 

The  Megarians  show  the  grafting  of  the  Socratic  conception  of 
genera  upon  the  earlier  school  of  Elea. 

Article  3 — The  Cyrenaics. 

Aristippus  is  the  leader  here;  a  clear  mind  and  exact  thinker.  He 
seized  upon  the  "Good"  of  Socrates  and  devoted  his  attention  to  its 
analysis.    What  is  the  "  Good  "  ? 

Since  the  days  of  Anaxagoras  and  the  discovery  of  Protagoras,  every 
philosophic  concept  must  have  a  purpose;  what  then  is  the  purpose  of 
the  "Good,"  as  capable  of  being  realized.  Aristippus  applies  the  ana- 
lytic, subjective,  principle  of  Protagoras  to  the  synthetic,  objective, 
"Good"  of  Socrates,  and  discovers  that  the  "Good"  can  have  no  signifi- 
cance other  than  in  relation  to  the  individual  human  percipient.  The 
"  Good"  of  Socrates,  therefore,  like  the  Nous  of  Anaxagoras,  must  possess 
a  finite  purposive  existence  in  the  human  mind.    The  "Good,"  conse- 

1  Sophist,  246  B.  Cf.  Cousin,  Oeuvres  de  Platan,  note  to  The  Sophist.VoL  XI.,  p.  517.  Also  Zeller  Socrates 
and  the  SocraUc  Schools,  p.  218. 

*  Euclides,  n  10.,  p.  58. 

•  Eusebius.  Praep.,  Ev.  XIV.  17.  i. 


Bk.  IV  Attic  Philosophy  483 

quently,  is  definite  and  concrete;  not  indefinite  and  abstract  as  Socrates 
left  it.  This  may  seem  but  a  return  to  the  formless  shoals  of  individual 
opinion,  and  such  is  practically  the  case.  Aristotle^  groups  Aristippus 
with  the  Sophists;  but  Aristippus,  nevertheless,  goes  a  step  farther.  He 
says  the  Sophists  discovered  the  island  of  subjective  opinion,  but  they 
did  not  develop  a  method  of  realizing  the  "Good."  This  method,  says 
Aristippus, 2  is  as  follows:  Man  is  conscious  of  sensations  which  may  be 
broadly  classified  as  pleasurable  or  the  reverse.  The  wise  man  in  search 
of  the  "  Good,"  therefore,  will  analyze  these  in  relation  to  each  other,  and 
choose  the  most  agreeable.  This,  says  Aristippus  is  the  "  Good"  —  and 
Aristippus  says  no  more.  The  Cyrenaics  show  the  fusion  of  Socratic 
thought  with  Atomism  and  the  subjective  opinion  of  the  Sophists. 

Article  4 — The  Cynics. 

Virtue,  say  the  Cynics,  is  the  only  good,  and  turn  their  attention  to 
Virtue.  This  school  presents  little  thought  of  importance.  Aristotle,^ 
who  misses  nothing  of  interest  in  earlier  thought,  pays  little  attention  to 
the  Cynics.  Here  is  another  phase  of  the  many  sided  Socrates.  His 
abstemiousness  and  self-control  are  seized  upon  by  certain  minds  with  a 
leaning  toward  aceticism,  and  in  this  way,  the  avoidance  of  pleasure  and 
the  comforts  of  existence  is  laboriously  identified  with  Virtue. 

The  great  majority  of  the  followers  of  Socrates  was  intellectually 
incapable  of  understanding  him  in  any  comprehensive  sense,  with  the 
result  that  each  one  took  what  small  portion  each  was  able  to  seize  and 
carry,  and  proceeded  to  graft  it  upon  the  established  systems.  Socrates 
had  boldly  attacked  these.  The  Post-Socratic  schools  are  startled 
into  thought  for  a  moment,  and  then  begin  to  sink  helplessly  back  into 
the  old  channels  and  currents. 

Section  HI  —  Plato 

As  the  True,  the  Good,  and  Virtue  are  analyzed  with  the  later  Socratic 
thinkers,  it  seems  as  though  an  iridescent  bubble  had  swelled  until  it 
burst.  It  seems  as  though  these  later  expeditions,  although  they  had 
steered  clear  of  the  islands  for  a  time,  were  not  far  upon  their  journey. 
A  few  more  questions,  a  few  more  answers,  strong  currents  will  set  in, 


'  Melaph.  B.  2,  896  a  32. 

'  Laertius,  II.  8,  p.  53. 

'  Melaph.  A.  29,  1024  b  3a. 


484  Philosophy  Pt.  IV 

and  it  will  be  but  a  question  of  time  until  the  rocks  of  Atomism  or  the 
shoals  of  Sophistry  appear  once  more. 

But  the  most  important  question  of  all  those  asked  by  Socrates  has 
not  yet  been  studied.  The  great  question,  that  upon  which  all  others 
depend,  and  from  which  all  others  must  be  answered;  the  question: 
What  is  Knowledge?  The  mind  of  Socrates  was  capable  of  embracing 
and  containing  all  that  preceded  him  in  thought.  It  holds  the  Eleatic 
metaphysicians  through  the  Megarians,  the  subjective  idea  of  the  Soph- 
ists through  Aristippus  and  the  Cynics.  Without  the  Socratic  schools, 
it  would  have  been  impossible  to  gather  preexisting  systems,  focus  them 
at  one  point  with  Socrates,  formulate  their  positions  and  establish  the 
basis  of  supplies  and  point  of  departure  of  the  greatest  voyage  that  ever 
sailed  the  speculative  seas:  the  voyage  of  Attic  philosophy,  which  not 
only  moved  with  the  impetus  gained  with  the  concentration  of  previous 
thought;  but  which,  it  may  well  seem,  has  swept  the  seas  clean  for  those 
who  came  after.  The  mind  of  Socrates  was  the  focus  in  which  earlier 
thought  centred  and  from  which  the  new  expedition  sets  out;  the  minds 
of  Plato  and  Aristotle  were  the  directing  forces. 

"The  universal  objective  reason,"  says  Erdmann,^  "which  Anaxagoras 
had  meant  (or  at  least  included)  in  his  voOi;,  has  by  the  moral  genius  of 
Socrates  become  subjective  in  him  (the  avOpwxoq  of  Protagoras) ;  so  that 
when  he  consults  his  own  genius,  the  deity  answers  in  it,  when  he  follows 
his  own  pleasure,  reason  is  followed.  Thus  he  stands  above  Anaxagoras 
and  Protagoras  as  their  higher  unity."  .  .  .  "The  Megarians  had 
shown  how  much  room  there  was  for  Eleatic  metaphysics  in  the  Socratic 
doctrine;  Aristippus  had  indicated  its  points  of  contact  with  Protagoras, 
and  hence  with  the  physics  of  Heraclitus  and  the  Atomists;  finally 
Antisthenes  had  proved  the  possibility  of  being  an  adherent  of  Socrates, 
and  yet  remaining  a  dialectician  after  the  fashion  of  Gorgias  trained  by 
Zeno  and  Empedocles.  None  of  these  facts  were  forgotten,  and  at  the 
same  time  the  last  of  the  pre-Sophistic  views  of  the  world,  that  of  the 
Pythagoreans,  is  consciously  incorporated  with  Socratism.  The  repre- 
sentative of  this  Socratism  thus  apprehended  from  every  side,  is  Plato; 
and  it  is  no  accident  that  he  connects  all  his  inquiries  with  the  person  of 
Socrates,  in  whom  philosophy  had  become  personal." 

This  is  the  complete,  comprehensive  Socrates;  no  longer  the  Socrates 
left  behind  with  the  hemlock  in  his  hand.  This  is  the  Socrates  analyzed 
from  every  side,  studied  in  every  relation  to  preceding  thought;  the 

»VoLI.,p.94. 


Bk.  IV  Attic  Philosophy  485 

Socrates  fully  "determined"  in  the  philosophic  sense.  The  first  Socrates 
asks  the  question  what  is  Knowledge?  The  second  Socrates,  or  Plato, 
answers  it,  and  from  this  question  and  answer  starts  the  human  Reason 
once  again  for  her  fifth  voyage. 

In  order  to  understand  Plato's  answer  to  this  question,  it  is  essential  to 
bear  in  mind  the  exact  condition  of  speculative  thought  of  that  day.  The 
importance  of  the  Protagorean  discovery  of  the  subjectivity  of  knowledge 
cannot  be  overstated;  considerations  advanced  from  other  points  of 
view  possess  no  interest  for  a  philosopher  from  this  time  on:  he  has  under- 
mined the  foundations  of  other  positions.  On  the  other  side  Democ- 
ritus  and  his  followers  had  analyzed  matter  by  means  of  reason  based 
upon  sense  perception.  A  man  who  understands  the  perfect  rationality 
of  pure  Atomism  must  be  reached  through  the  action  of  reason  based 
upon  something  other  than  sense  perception ;  he  has  exhausted  the  pos- 
sibilities of  reason  based  upon  sense.  The  man  who  can  command 
a  philosophic  expedition  from  this  point  must  understand  the  exact 
position  of  these  rocks  and  shoals  and  know  the  precise  situation,  direc- 
tion, and  strength  of  every  current  in  the  seas. 

Knowledge,  say  the  Sophists,  is  individual  opinion.  Knowledge,  say 
the  Atomists,  is  sense  perception.  Socrates  in  the  Theaetetus  says  that 
Knowledge  is  nothing  of  the  kind.  The  philosophers  study  his  position, 
formulate  it  in  relation  to  their  own,  and  find  material  for  new  inquiry. 
The  Reason  is  at  last  prepared  for  a  new  voyage;  she  has  merely  been 
putting  about  so  far  in  order  to  gather  the  philosophers  for  a  serious 
expedition.  Plato  is  the  heir  of  Socrates  and  is  put  in  command.  The 
Reason  gets  under  way. 

The  Sophists  ask  Plato  the  great  question  first.  "What,  they  say, 
is  Knowledge?"  "Knowledge,"  says  Plato,  "is  subjective."  The 
philosophers  breathe  a  sigh  of  relief;  they  know  they  are  really  off  at 
last.  "But,"  Plato  continues,  "Opinion  is  not  Knowledge.  There  is 
deeper  subjective  Knowledge  within  man's  soul  than  mere  individual 
opinion.  For,"  he  continues,  "the  lovers  of  true  wisdom  know  that 
philosophy,  taking  the  soul  under  its  care,  a  prisoner  in  the  body,  as  it 
were,  and  fast  bound  therein,  compelled  to  look  upon  the  world  as 
through  a  dungeon  and  not  freely  and  independently,  but  steeped  in 
utter  ignorance,  perceive  that  the  strength  of  the  prison  is  founded  in 
the  souls'  own  desires;  that  the  prisoner  ever  tightens  his  own  bonds. 
The  lovers  of  wisdom,  I  say,  know  that  philosophy,  receiving  the  soul 
in  this  condition,  talks  to  her  gently  and  quietly  and  tries  to  set  her  free; 


486  Philosophy  Pt.  IV 

tells  her  that  the  perception  of  the  eyes  is  full  of  illusion,  as  is  that  of  the 
ear  and  the  other  senses;  and  advises  her  to  depend  upon  these  as  little  as 
possible,  persuading  her  to  gather  and  concentrate  herself  within  herself, 
to  put  her  faith  in  nothing  but  herself,  and  in  that  portion  alone  of  her 
being,  in  and  by  itself,  which  she  can  grasp  and  understand  in  and  by 
herself;  and  to  regard  as  untrue  that  which  she  learns  by  other  means 
which  vary  with  varying  conditions.  Such  things  are  indeed  tangible 
and  obvious,  but  that  which  she  herself  perceives  is  in  thought  and  pure 
reason,  and  without  bodily  form.  Real  wisdom,  true  knowledge,"  says 
Plato,  "Ues  within  each  man's  own  soul;  but  it  must  be  sought  thought- 
fully and  earnestly.  Here  within  us;  within  the  inmost  depths  of  our 
own  being;  lie  the  elements  of  truth;  the  essences  of  all  worthy  the 
effort  of  those  who  seek  to  know." 

Thought  begins  its  history  with  the  vague  idea  of  the  existence  of  some 
cosmic  ReaUty,  or  Truth,  to  be  discovered  through  the  observation  of 
external  nature;  it  resolves  this  conception  into  the  objective  Reason 
of  Anaxagoras,  and  thence  into  subjective  opinion  with  Protagoras. 
It  thus  seems  to  have  sought  something  which  had  no  existence.  It  dis- 
covers a  cloud  to  be  a  butterfly,  and  a  butterfly  but  that  which  any  one 
might  happen  to  think  it.  This  is  the  "enlightenment"  of  the  Sophist; 
the  cloud  drifts  by,  the  butterfly  is  dissected  and  thrown  away  but 
nothing  remains.  This  enlightenment  is  that  of  utter  instability  and  the 
cloud  rises  upon  an  empty  farce.  Thought  examines  and  rejects  this 
position  with  Socrates,  and  Knowledge,  after  being  analyzed  from  an 
objective  cloud  into  subjective  opinion,  again  becomes  objective  within 
the  human  consciousness  itself.  Thought  here  finds  once  more  "the 
question,  the  wonder  and  the  doubt"  of  the  true  philosopher:  a  whole 
world  unexplored;  the  world  that  lies  within.  Plato  is  in  full  command 
of  the  ship.  The  breeze  freshens  and  the  low-lying  shoals  of  the  island 
of  Sophistry  disappear  behind  her  wake. 

The  speculative  seas,  however,  are  treacherous;  the  most  promising 
expedition  may  suddenly  find  itself  becalmed  or  drawn  into  winds  and 
currents  which  render  further  progress  impossible;  and  this,  perhaps, 
when  all  may  seem  most  favourable.  The  Reason  is  well  under  way, 
the  shoals  of  Subjectivety  are  disappearing  astern;  but  there  is  another 
island  to  be  cleared.  The  black  rocks  of  Atomism  loom  over  the  horizon 
and  the  winds  and  currents  seem  drawing  in  that  direction.  The  philos- 
ophers begin  to  watch  the  rocks.  Plato  knows  what  the  next  question 
must  be.    The  ship  is  beginning  to  drift;  the  question  must  be  answered. 


Bk.  IV  Attic  Philosophy  487 

The  question  is:  If  knowledge  lies  within,  whence  is  that  knowledge 
derived?  The  rocks  of  sense  perception  seem  strangely  near.  But 
Plato  knows  the  rocks,  and  the  currents.  He  says:  "This  knowledge  is 
based  upon  ideas  which  are  not  derived  through  the  senses;  but  which 
each  individual  may  discover  within  the  elements  of  his  own  conscious- 
ness." Philosophers  are  sensitive  to  the  way  of  a  ship  on  the  speculative 
seas.  They  know  that  the  Reason  is  here  suddenly  caught  in  a  strong 
current  sweeping  her  back  toward  the  island  of  Sophistry;  because,  if 
these  ideas  are  not  derived  through  the  senses,  they  must  be  implanted 
within  each  mind  at  birth.  If  they  are  implanted  at  birth,  they  must 
either  be  identical  or  different  in  all  individuals.  If  identical,  all  men 
will  think  alike.  But  all  men  do  not  think  alike.  Therefore,  Knowl- 
edge based  upon  these  innate  ideas  must  eventually  resolve  itself  into 
nothing  but  mere  individual  opinion  as  before.  But  Plato  knows  this 
perfectly  and  continues: 

''These  ideas  of  which  I  speak  are  not  implanted  within  the  soul  at 
birth;  the  human  soul  is  immortal;  but  how  may  true  immortality  be 
conceived  other  than  as  existence  extended  throughout  a  limitless  past, 
as  well  as  throughout  a  limitless  future?  The  soul  which  thinks  and 
lives  within  each  man  on  earth;  the  soul  which  constitutes  in  each  of  us 
our  own  true  being,  is  derived  from  that  absolute  and  immortal  Being 
within  which  all  wisdom  and  knowledge  is  contained.  The  sovil  of  man, 
passing  its  transitory  existence  here  below,  comes  from  absolute  Exis- 
tence which  knows  neither  beginning  nor  end.  From  this  Existence, 
then,  are  these  ideas  derived.  In  the  reminiscence,  or  recollection,  of  a 
higher  Knowledge,  inherited  from  man's  immortal  nature  must  the  ele- 
ments of  true  earthly  knowledge  be  discovered.  The  human  soul  not 
only  lives  and  shall  live,  but  always  has  lived;  the  purest  sources  of 
thought,  welling  spontaneously  within,  have  been  engendered  in  another 
and  a  higher  life.  In  this  thought,  in  these  ideas,  which  constitute  the 
generic  conceptions  of  the  phenomenal  world,  we  may  find  glimpses  of 
the  Truth.  These  ideas  are  the  elements  of  Knowledge.  They  form 
the  universals  within  which  all  particulars  are  contained;  the  permanent 
existences  underlying  the  changeable  material  of  phenomenal  nature; 
and  thus  constitute  the  essentials  of  real  knowledge.  By  reasoning 
from  these  universals,  these  generic  conceptions  of  the  phenomenal,  to 
still  higher  conceptions,  from  generalization  to  higher  syntheses,  may  man 
obtain  an  insight  into  truth;  the  Truth  within  which  all  truths  are  con- 
tained; the  Truth  of  the  One  the  Absolute,  the  Beautiful,  the  Good. 


488  Philosophy  Pt.  IV 

Within  us,"  says  Plato,  to  the  Sophists,  "within  the  elements  of  each 
man's  own  soul,  lie  the  objective,  or  eternal,  elements  of  knowledge, 
and  in  the  rational  analysis  and  combinations  of  these,"  he  says  turning 
to  the  Atomists,  "lies  Knowledge."  "Man,"  says  Plato,  "sees  with  his 
Reason  and  not  with  his  eyes."^ 

The  Platonic  theory  of  Knowledge  is  a  suggestive  conception.  The 
philosophers  grow  conscious  of  a  breath  of  genius;  the  Reason  swings  up 
into  the  wind,  frees  herself  from  the  eddies  of  Subjectivity,  and  bears 
away  from  the  rocks  of  Atomism.     She  is  really  cleared  at  last. 

The  rocks  and  the  shoals  sink  below  the  horizon  astern.  The  Reason 
lifts  with  the  swell  of  deep  waters  and  steers  for  the  open  sea.  Soft 
skies  smile  down  invitingly  and  the  gods  seem  strangely  near.  The  man 
at  the  lookout  reports  land  in  sight.  "The  land,"  says  Plato,  "is  the 
land  of  Knowledge:  the  land  of  the  Good,  the  Beautiful,  the  True." 

One  of  the  philosophers  goes  forward  to  see  for  himself.  He  is  a  man 
with  exact,  clean-cut  features.  He  reports  no  land  in  sight;  he  says  it 
was  an  illusion ;  and  adds,  moreover,  that  the  ship  will  never  make  land 
in  the  direction  in  which  she  is  heading.  All  is  attention.  No  man 
makes  a  statement  on  the  Reason  which  he  is  not  ready  to  support 
against  all  comers.  This  man's  name  is  Aristotle.  The  philosophers 
Hsten. 

Section  IV  —  Aristotle 

I.  *' Plato,"  says  Aristotle,  "is  attempting  to  reach  knowledge  by 
means  of  a  theory  and  method  of  inquiry  based  upon  the  existence  of 
abstract,  general  conceptions,  within  which  the  particulars  of  the  phenom- 
enal world  are  contained.  A  thing  must  exist  either  objectively  or  sub- 
jectively. If  these  general,  or  universal,  ideas  of  Plato  are  conceived 
as  existing  objectively,  either  within  or  without  the  human  consciousness, 
this  method  and  theory  will  be  involving  inquiry  in  a  hopeless  and  unnec- 
essary confusion  for  the  following  reasons.  The  essence  and  condition 
of  the  typical,  or  general,  conception  is  classification.  When  we  reduce 
particular,  sensible  phenomena  to  rational,  typical  conceptions  we 
classify  them;  we  separate  and  classify  a  particular  thing  within  a 


•  Plato's  theory  of  knowledge  runs  through  his  entire  works.  As  the  sources  of  the  above  summary,  the 
following  passages  may  be  cited.  Phaedo  72-75,  82,  83,  qi,  q2,  Meno  81-86,  Laws  732.  Timeus  36.  Craly- 
lus  440.  Republic  X,  596,  611,  Phaedrus  249,  250.  The  statement  that  man  see  with  his  reason  and  not 
with  his  eyes,  is  suggested  by  Plato's  remark  in  Laertius'  Life  of  Diogenes  the  Cynic  (VI.  2.  p.  14S)' 
When  the  latter  said  that  he  could  see  the  table  and  the  cup,  but  not  their  generic  conceptions;  Plato 
replied,  "  Because  you  have  eyes  to  see  the  first,  but  not  intellect  to  see  the  other." 


Bk.  IV  Attic  Philosophy  489 

general  conception.  These  general  conceptions,  Plato  tells  us,  are  the 
only  Realities.  Owning  to  the  constant  flux  and  change  in  which  all 
sensible  phenomena  are  involved,  these  generalities,  Plato  would  have 
us  believe,  are  the  permanent  elements  in  things  with  which  alone  pure 
knowledge  must  concern  itself.  It  must  be  remembered,  however,  that 
any  given  particular  may  be  embraced  within  a  great  number  of  abstract 
generalizations.  Thus  the  particular  Socrates  may  be  classified  under 
the  general  conceptions  of  man,  biped,  animal,  philosopher,  statesman, 
soldier,  and  so  forth ;  and,  in  attempting  to  reach  knowledge  in  the  analy- 
sis of  these  abstractions  alone,  we  are  involving  inquiry  in  a  confusion 
which  can  lead  to  nothing  but  the  profitless  increase  in  the  number  of 
abstract  generalizations.  Again,  it  must  be  rememberd  that  these 
typical  ideas  will  refer  to  types  as  well  as  to  things  —  that  is,  they  will  be 
particulars  and  generals  at  the  same  time.  The  use  of  this  method,"  says 
Aristotle,  "is  as  though,  in  attempting  to  solve  an  arithmetical  problem, 
we  began  our  calculations  by  increasing  the  numbers  with  which  we  have 
to  deal  by  way  of  simplification." 

II.  "But,"  continues  Aristotle,  "these  abstractions  of  Plato  have  no 
rationally  conceivable  objective  existence,  either  within  or  without  the 
human  consciousness,  for  the  following  reasons.  These  ideas  neither 
are,  can  be,  nor  pretend  to  be  anything  but  the  expression  of  the  relation 
existing  between  particular  things  and  general  conceptions;  and  the 
relation  between  two  things  can  possess  no  conceivable  existence,  except 
within  the  consciousness  of  the  finite,  percipient  subject.  These  Pla- 
tonic generalizations,  therefore,  are  subjective;  in  the  exact,  and  limited 
interpretation  of  the  word,  and  subjective  alone.  Nor  is  their  existence 
possible  under  any  other  condition;  for  how,"  asks  Aristotle,  "can  the 
subject  form  any  conception  of  the  relation  between  particulars  and  the 
categories  within  which  these  are  contained,  except  through  the  study  of 
particulars?  And  how,"  he  asks  again,  "may  the  study  of  particulars 
be  profitably  carried  on  by  the  human  subject  in  any  way  other  than  in 
the  study  of  the  natural  phenomenal  world  as  revealed  to  us  through  the 
observation  of  the  senses? 

III.  "Heraclitus  has  shown,  however,"  Aristotle  continues,  "that  all 
phenomena  falls  under  the  observation  of  the  senses  in  a  never-ceasing 
condition  of  change;  but  the  science  of  things  in  constant  flux  can  have 
no  existence.  If,  therefore,  knowledge,  or  science,  can  exist  at  all,  it  can 
exist  but  in  the  systematized  study  of  the  permanent  elements  under- 
lying sensible  phenomena.    These  elements  of  knowledge,  therefore, 


490  Philosophy  Pt.  IV 

must  exist  in  a  state  of  permanence,  independently  of  direct  and  immedi- 
ate sense  perception.  These  permanent  elements  are  discoverable  only 
through  a  systematic  method  of  observation,  and  inquiry  based  upon 
rational  induction;  or  a  process  of  reasoning  from  particulars,  directly 
perceived  through  sense  impression,  to  rationally  formulated  generaliza- 
tions based  upon  these.  By  this  means,  and  by  this  means  alone,  can  we 
lay  the  foundations  of  true  Science  and  Method;  and  Science,  and 
Method  begin,"  says  Aristotle,  "when,  from  many  conceptions  derived 
from  experience,  one  universal  conception  is  evolved  which  will  embrace 
all  similiar  cases.  Reminiscence  is  essential  in  the  search  for  knowledge, 
but  the  search  for  knowledge  can  never  be  effectively  carried  on  through 
any  method  based  upon  any  reminiscence  other  than  that  of  previous 
experience  gained  by  the  patient  observation  and  classification  of  the 
phenomena  of  nature;  as  revealed  to  man  through  the  intelligent  use 
of  his  sentient,  percipient  faculties. 

IV.  ''The  general  conceptions  so  derived,  however;  these  perma- 
nent elements  of  things,  are  not  implanted  within  the  individual 
consciousness  at  birth;  neither  are  they  reminiscences  of  a  previous 
existence,  nor  direct  sense  impressions.  They  are,  on  the  contrary, 
rational,  subjective  conceptions,  developed  within  the  mind  itself; 
but  derived  from,  and  entirely  dependent  upon,  the  contact  of 
the  reason  with  external  nature  through  the  systematic  observation  of 
the  senses. 

"This,"  says  Aristotle,  "is  the  path  of  true  Knowledge;  the  path  of 
comparative  analysis,  inductive  reasoning,  and  experimental  verification 
of  the  positions  so  derived;  the  path  which  leads  through  careful  obser- 
vation of  nature,  patient  research  and  experiment  from  particular  truths 
to  truths  of  ever-widening  application  and  of  ever-deepening  significance. 
It  is  a  very  astonishing  thing,"  he  concludes,  "if  we  were  indeed  blest 
with  such  a  congenital  knowledge  of  things,  as  Plato  suggests,  that  we 
nevertheless,  should  be  totally  unconscious  of  the  possession  of  such  a 
rare  and  priceless  treasure.  Man,"  says  Aristotle,  "sees  with  his  eyes 
first;  and  with  his  reason  afterward. "^ 

It  may  be  said  in  brief  that  Aristotle  seized  the  indefinite,  objective, 
idealistic  abstraction  of  Plato,  based  upon  reminiscence  of  previous 
existence;  seized  it  in  the  psychical  ether,  as  it  were,  and,  by  a  masterly 

'  The  above  is  a  brief  analysis  of  Aristotle's  refutation  of  the  Platonic  Theory  of  knowledge  and  the 
jstablishment  of  his  own.  It  is  derived  from  all  his  writings;  the  following  passages  may  be  sp>erifically 
cited:  Melaph.  A.  i,  981  a  i;  A.  g,  992,  903;  B.  i,  996  a  6;  B.  6,  1003  a  7;  Z.  16,  1040  b  2$;  M.  4,  5,  9; 
Afialyt  Post.,  A.  13,  81. 


Bk.  IV  Attic  Philosophy  491 

metaphysical  tour  de  force,  turned  it  into  a  definite,  subjective,  idealistic 
abstraction,  based  upon  experience. 

There  are  no  artificial  distinctions  of  rank  on  the  Reason;  the  man 
commands  her  who  can.    Aristotle  is  at  the  helm. 

The  niists  thought  to  be  land  clear  away,  and  Aristotle  lays  the  new 
course.  The  philosophers  begin  to  analyze  matter  in  the  laboratory 
instead  of  in  their  minds  as  before;  and  the  foundations  of  the  experi- 
mental sciences  are  laid.  Definition,  induction,  and  experimental 
verification  of  impressions  derived  from  the  observation  of  nature, 
are  the  means  Aristotle  offers  for  the  attainment  of  knowledge;  the 
stars,  by  which  he  lays  the  new  course.  The  good  ship  Reason  speeds 
onward,  the  hand  at  the  helm  is  steady;  and  the  seas  stretch  ever 
ahead. 

The  philosophers  analyze  and  generalize,  and  each  new  discovery  opens 
up  the  possibility  of  other  new  discoveries  lying  still  beyond;  they 
analyze  and  define  these  only  to  find  other  material  for  newer  discoveries 
ever  forming  in  the  mind.  The  promised  land  of  Knowledge  seems  far; 
the  seas  stretch  away,  and  the  course  of  the  Reason  opens  up  ever- 
widening  and  ever-receding  horizons  of  inductive  generalizations  of 
which  there  appears  no  end.  Month  after  month  goes  by,  year  after 
year,  and  they  seem  no  nearer  Knowledge  than  before;  an  endless  sky 
spreads  ever  above  and  an  endless  sea  beneath.  The  philosophers 
begin  to  ask  where  they  are  going?  How  they  may  know  whether  they 
were  going  anywhere  or  not?  Time  flows  by,  the  horizons  recede;  new 
horizons  take  their  place  only  to  fade  and  recede  in  turn.  The  phi- 
losophers grow  w^eary.  The  hand  at  the  helm  is  steady,  but  the 
hand  grows  rigid  and  cold,  the  eye  grows  glazed  and  motionless — 
and  the  philosophers  know  that  Aristotle  can  see  no  farther.  He 
takes  them  out  on  all  endless  voyage  on  a  shoreless  sea  and  leaves  them 
there. 

The  philosophers  find  they  are  realizing  nothing.  The  Aristotelian 
method  discovers  nothing  but  the  possibilities  of  new  discoveries  through 
a  never-ending  series  of  generalizations.  The  object  of  Philosophy  is 
determination,  realization.  A  man  enters  the  field  of  rationalized 
research,  not  for  the  sake  of  the  research,  but  for  what  the  research  is 
capable  of  realizing.  Definite  self-realization  is  the  goal  of  philos- 
ophy; and  a  never-ending  process  of  ratiocination  realizes  nothing.  The 
philosophers  grow  impatient.  They  ask  what  is  this  Knowledge  they 
seek  so  helplessly?    In  what  is  it  contained?    How  may  it  be  deter- 


492  Philosophy  Pt.  IV 

mined?  How  realized?  What  means  have  they  of  distinguishing  be- 
tween knowledge  and  something  other  than  knowledge?  An  endless 
sea  of  glittering  generalizations  is  all  that  Aristotle  offers;  but,  what 
means,  they  ask,  have  they  of  knowing  whether  these  generalities,  or 
anything  else  for  that  matter,  constitute  true  knowledge?  How  shall 
they  know  that  they  know?  What  is  the  criterion  of  knowledge?  To 
what  may  it  be  referred? 

The  philosophers  ponder:  Aristotle  had  never  paid  any  attention  to 
this  question.  He  had  assumed  that  rational  generalizations  based 
upon  systematic  analysis  of  sense  experience,  constituted  knowledge. 
This  assumption,  however,  simply  leads  through  boundless  seas  of  widen- 
ing abstractions.  The  question  arises  how  must  knowledge  be  under- 
stood and  determined.  If  knowledge  does  not  exist,  further  speculation 
is  useless;  if  it  does  exist,  where  and  how  does  it  exist?  An  endlessly 
self-perpetuating  series  of  generalizations  is  certainly  not  knowledge  in 
its  philosophic  sense.  What  then  is  knowledge?  What  is  the  criterion 
of  Truth? 

To  refer  this  criterion  with  Aristotle  to  sense  and  reason  is  no  longer 
possible;  this  method  has  no  end.  Sense  and  reason  combined  merely 
multiply  the  possibilities  of  abstract  conceptions.  The  philosophers 
have  learned  that  the  voyage  of  the  Reason  can  last  forever  upon  this 
assum.ption  and  take  them  nowhere.  What  then  is  the  criterion  of 
Truth? 

This  is  a  vital  question ;  a  critical  position  in  every  voyage  of  specu- 
lative discovery.  Men  who  take  the  trouble  to  man  the  Reason  know 
the  course  that  lies  in  her  wake.  They  will  pay  no  attention  to  any 
objective  criterion  of  Knowledge,  Truth,  Reason  or  anything  else;  these 
men  have  left  the  shoals  of  subjective  opinion  behind  them.  They  them- 
selves, therefore,  must  be  able  to  grasp  the  criterion  they  seek,  or  it  can 
have  no  existence  so  far  as  they  are  concerned.  These  men  begin  to 
realize  that  the  human  being  is  in  possession  of  but  three  conceivable 
modes  of  rational  perception:  Sense,  Reason  or  their  combination. 
They  have  exhausted  the  possibilities  of  their  combination  with  the 
followers  of  Heraclitus  and  Aristotle.  They  thus  begin  to  perceive  that 
the  criterion  of  Truth  must  lie  in  sense  or  reason;  not  in  their  combina- 
tion. It  can  lie  in  nothing  else  because  there  is  apparently  nothing  else 
within  the  rational  content  of  the  human  consciousness.  An  endless  sea 
of  generalities  is  of  slight  interest  to  the  philosopher  on  reaching  this 
point.    He  is  weary  of  the  seas  and  wants  to  reach  land;  let  it  be  where 


Bk.  IV  Attic  Philosophy  493 

it  may.    The  name  of  the  man  who  answers  this  important  question  is 
Epicurus;  the  philosophers  Usten. 

Section  V  —  Epicurus 

** Reason  and  sense  combined,"  says  Epicurus,  "are  taking  us  no- 
where; they  mean  but  a  glassy  sea  of  mental  abstractions.  The  real 
criterion  of  truth  can  never  be  found  in  this  way;  it  must  lie  either  in 
reason  or  in  sense;  not  in  their  combination.  But  we  have  already 
exhausted  the  possibilities  of  metaphysical  reason  with  Pythagoras,  the 
Eleatics,  and  Plato;  and  they  developed  nothing  tangible.  The  definite 
criterion  of  Truth  and  Reality,  therefore,  must  lie  in  the  perceptions  and 
affections  of  the  senses.^  For  the  senses  are  devoid  of  all  reason  and 
incapable  of  receiving  impressions  from  memory.  They  cannot  cause 
motion  of  themselves,  nor  increase  nor  diminish  the  impressions  they 
receive  from  external  sources.  They  lie  beyond  control;  for  the  similar 
cannot  judge  the  similar,  being  of  equal  value;  nor  the  dissimilar,  for  they 
possess  different  criteria;  nor,  in  fact,  can  any  sensation  judge  of  an- 
other, for  they  all  influence  us  at  the  same  time.  The  reason  again  can- 
not judge  of  the  senses;  for  all  reason  depends  upon  these.  The  truth 
of  the  senses  is  established  by  the  reality  of  their  perceptions;  for  sight 
and  hearing  are  as  real  to  us  as  pain.  It  follows  from  these  considera- 
tions that  we  should  judge  of  the  unknow^n  by  that  which  is  evident — 
that  is,  the  perceptions  of  the  senses. 

"The  criterion  of  Truth,  then,"  says  Epicurus,  "  is  sense  perception." 
"Man,"  says  Epicurus,  "sees  with  his  eyes  and  nothing  else."  Epi- 
curus is  at  the  helm  and  lays  the  course  as  follows i^  "The  universe  is 
body,  or  matter;  for  that  bodies  exist  the  senses  everywhere  testify; 
and,  as  previously  pointed  out,  the  senses  should  decide  everything  not 
directly  evident.  Otherwise  if  there  were  no  such  thing  as  what  we  call 
the  void,  or  empty  space,  there  would  be  nothing  in  which  bodies  could  be 
contained,  or  across  which  they  could  move  as  we  see  them  move  in 
reality.  ...  Of  bodies,  some  are  combinations  and  some  the  ele- 
ments from  which  these  combinations  are  formed.  These  last  are 
indivisible  and  unchangeable;  otherwise  all  things  would  eventually  be 
resolved  into  non-existence.  But  these  elements  persist  independently 
of  the  flux  and  change  of  all  combined  bodies;  they  are  complete  in 
themselves  and  thus  offer  no  opportunity  for  natural  dissolution.    It 

*  Laertius  X.  20,  p.  262. 
'  Ibid.  24,  pp.  263,  264. 


494  Philosophy  Pt.  IV 

follows  necessarily,  therefore,  that  the  elements  of  things  must  be  in- 
divisible atoms.  .  .  .  We  must  remember  ^  also  that  images 
are  produced  simultaneously  with  perception;  for  images  are  con- 
stantly being  thrown  off  from  the  siirfaces  of  bodies  and  as  constantly 
replaced." 

The  philosophers  hear  the  grating  of  the  keel  of  the  Reason  as  she 
strikes  a  shore  at  last.  Epicurus  has  here  discovered  another  island  in 
the  philosophic  seas;  and  the  island  is  of  the  same  geological  forma- 
tion as  that  of  Diogenes  and  Democritus;  but  not  the  same  island. 
This  island  is  larger  and  stronger  than  the  others.  It  has  been  dis- 
covered through  the  minds  of  Plato  and  Aristotle;  and  is  the  island  of 
sense  perception  as  the  ultimate  criterion  of  all  human  knowledge;  in  a 
universe  of  atoms,  space,  and  motion,  and  nothing  else.  The  philos- 
ophers know  that  the  Reason  here  ends  her  voyage;  she  will  never  sail 
again.  No  speculative  expedition  can  be  fitted  out  on  this  island,  it 
contains  no  chart  of  the  seas,  and  the  star  to  the  north  leads  nowhere. 
The  philosophers  walk  ashore  and  watch  the  Reason  as  she  pounds  to 
pieces  on  the  rocks. 

Few  figures  in  the  history  of  thought  have  been  so  misunderstood 
as  Epicurus.  His  was  a  lucid  intelligence.  He  perfectly  understood 
Plato  and  Aristotle,  and  knew  that  one  could  only  paint  pictures  of 
knowledge,  and  the  other  but  offer  an  endless  series  of  ever-receding  hori- 
zons. Epicurus  was  a  true  philosopher;  he  sought  realization,  not 
abstractions;  he  wanted  facts,  not  pictures;  and  he  discovered  the 
great  rockbound  island  of  subjective  sense  perception  as  the  only  criterion 
of  Truth. 

This  is  the  end  of  the  fifth  voyage  of  speculative  inquiry.  The  philos- 
opher must  either  stay  with  Epicurus  on  this  island  of  matter  and  sense 
perception,  or  go  back  to  the  beginning  and  start  once  more.  If  he 
stays  here,  he  accepts  a  purely  materialistic  and  mechanical  conception 
of  man  and  the  Universe.  Epicurus  reproduces  the  (fvciq  aXoyo?  of 
Democritus.  He  does  so,  however,  more  convincingly,  if  possible,  for 
the  reason  that  the  Atomism  of  this  period  has  been  developed  with 
the  experience  of  the  greatest  thought  of  the  world  behind  it.  Escape 
from  it  is  no  longer  possible  through  the  subjective  thought  of  Plato 
and  Aristotle. 

The  world,  however,  refused  to  accept  the  position  of  Epicurus  and 
began  again;  completing  the  fifth  cycle  of  philosophic  speculation.    This 

*  Ibid.,  p.  365. 


Bk.  IV  Attic  Philosophy  495 

cycle  extends  trom  Socrates  to  Epicurus;  from  about  the  80th  Olympiad 
(460  B.  C.)  to  the  final  breaking  up  of  Hellenic  thought. 

Section  VI — Zeno,  the  Stoic 

Another  voyage  of  inquiry  can  evidently  only  follow  Plato  and 
Aristotle.  They  took  the  Reason  number  five  farther  than  any  one 
else;  and,  consequently,  the  Reason  number  six  has  but  to  follow  in 
her  wake  until  in  the  neighbourhood  of  the  Atomic  rocks,  and  then 
sail  on  a  voyage  of  her  own. 

Here,  then,  the  inevitable  question  is  asked  once  more:  What  is 
the  criterion  of  Truth?  Where  is  it  found?  "In  sense,"  says  one  of 
the  philosophers.  The  rocks  loom  ahead,  down  goes  the  helm,  and 
the  ship  is  saved.  However  this  does  not  answer  the  question;  and 
the  Reason  number  six  is  now  drifting  helplessly  about  in  a  shoreless 
sea  with  rocks  in  the  offing. 

What  is  the  criterion  of  Truth?  It  is  obvious,  at  this  point,  that 
the  answer  cannot  be  found  in  the  abstract  Reason  of  Plato,  the  combi- 
nation of  Sense  and  Reason  of  Aristotle  nor  in  the  pure  Sense  of  Epicurus. 
There  is  only  one  conceivable  answer  which  will  not  reproduce  the 
exhausted  possibilities  of  these  positions.  The  Stoics  gave  the  answer, 
and  attempt  to  maintain  it  throughout  a  long  process  of  by  no  means 
inspiring  ratiocination,  in  which  they  are  constantly  reproducing  dif- 
ferent phases  of  long  exploited  hypotheses.  Laertius  and  Sextus  present 
this  answer  in  its  simplest  form.  The  criterion  of  Truth,  say  the  Stoics, 
is  found  in  what  they  called  the  Cataleptic  Phantasm,  or  sensuous 
apprehension.*  This  conception  of  knowledge  they  compared  to 
the  impress  left  upon  wax  by  a  seal;^  Knowledge,  therefore,  say  the 
Stoics,  is  the  modification  of  the  consciousness  through  sense  perception. 
This  conception  of  knowledge  is  tantamount  to  saying  what  was  the 
only  possible  thing  to  say  at  this  juncture  in  inquiry;  namely,  that  man 
sees  with  his  eyes  and  his  reason  at  the  same  time. 

This  is  the  theory  of  knowledge  of  the  founders  of  the  Stoical  school; 
Zeno,  Crysippus,  Cleanthes,  and  others.  Their  thought  reveals  a 
strong  theological  bias;  these  men  are,  properly  speaking,  out  of  place 
in  philosophy.  They  begin  to  differ  among  themselves  as  soon  as 
they  attempt  to  develop  their  positions;  and  an  analysis  of  almost 
any  of  these  shows  them  constantly  reverting  to  the  exhausted  theories 

»  Sextus,  Adv.  Math.  VII.  253. 
*  Lagrtius.     VII.  i,  35. 


496  Philosophy  Pt.  IV 

of  Plato  and  Aristotle  in  order  to  avoid  Skepticism  and  the  Atomism 
of  Epicurus.  The  Atomists  attack  them  on  one  side;  the  Skeptics 
on  another;  and  the  Stoics  in  their  struggles  are  forever  slipping  and 
tripping  over  exploited  hypothesis  no  longer  possessing  significance 
in  rational  thought.  The  only  position  of  philosophic  interest  presented 
by  the  Stoics  is  this  conception  of  knoweldge,  or,  the  criterion  of  Truth, 
as  contained  simultaneously  in  sense  perception  and  rational  appre- 
hension: the  instant  they  move  from  this  position  they  begin  to  repeat 
exhausted  theories.  Attention,  therefore,  may  be  concentrated  upon 
this  one  position  of  the  Stoics,  if  progress  is  desired,  for  no  other  position 
but  Atomism  interests  the  philosopher  at  this  point. 

Knowledge,  then,  say  Zeno  and  Crysippus,  is  the  modification  of 
the  soul  which  occurs  the  instant  it  perceives  anything;  and  this  si- 
multaneous physical  and  psychical  apprehension,  or  catalepsis,  is  the 
criterion  of  Truth.  This  is  the  way  the  Stoics  steer  the  ship  of  Reason 
away  from  the  neighbourhood  of  the  rocks  of  sense  perception.  This 
position  is  interesting  and  ingenious  as  the  only  conceivable  theory  of 
knowledge  not  fully  exploited.  However  a  question  arises.  Why 
should  simultaneous  sense  perception  and  psychical  apprehension 
necessarily  be  any  better  criterion  of  Truth  than  these  regarded,  either 
separately,  or  in  any  non-simultaneous  combination?  Why,  if  the 
wine  of  external  nature  is  poured  into  the  pure  water  of  the  soul,  through 
the  perception  of  the  senses,  should  their  combination  at  the  moment  of 
mingling  be  any  nearer  reality  than  the  wine  alone,  the  water  alone,  or 
their  combination  at  any  time  other  than  that  of  their  blending?  More- 
over, the  wine  modifies  the  water  of  the  soul,  as  the  seal  the  wax;  but 
is  not  the  wine  modified  as  well,  as  far  as  the  soul  is  concerned?  The 
water  reddens  with  the  wine.  But  does  not  the  wine  grow  paler?  What 
reason  then  is  there  to  regard  this  sensuous  apprehension  of  the  Stoics 
as  the  criterion  of  Reality?  To  what  may  it  be  referred  for  justifi- 
cation? If  to  sense,  the  rapidly  forming  currents  sweep  back  to  Atom- 
ism. If  to  any  phase  of  reason,  either  alone  or  combined  with  sense, 
abandoned  theories  reappear.  The  philosophers  state  these  considera- 
tions to  Zeno  and  ask  him  how,  by  means  of  his  criterion  of  Truth,  may 
true  and  false  impressions  be  distinguished.  "This  is  very  simple," 
says  Zeno,  "we  distinguish  them  by  separating  those  impressions  which 
we  perceive  to  be  fallacious  from  others  which  we  recognize  as  presenting 
a  real  object  as  it  really  is."^ 

»Seitus.  Adv.  Math.  VII.  244;  Laertius,  VII.  36.  37:  ZcUcr,  Stoia  and  Epicureans,  p.  86. 


Bk.  IV  Attic  Philosophy  497 

The  philosophers  are  bewildered;  however,  they  ask  him  hopefully 
if  he  will  explain  what  reason  he  has  for  believing  that  his  criterion 
itself  is  true —  that  is,  capable  of  establishing  a  real  thing  as  it  really  is, 
Zeno  says  that  this  involves  no  difficulty;  and  explains  the  process  as 
follows: 

"This  criterion  is  true  for  the  following  reasons:  We  possess  within 
us  the  power  of  judgment  and  assent,  just  as  we  possess  the  power  of 
willing;  these  impressions,  which  we  call  cataleptic,  are  those  which, 
through  their  irresistible  nature,  command  the  assent  of  the  judgment. 
These  cataleptic  impressions,  consequently,  are  obviously  true;  for 
the  reason  that  they  command  the  assent  of  the  judgment.  Our  cri- 
terion is  true,  therefore,  because  we  believe  it  to  be  true;  in  other  words, 
it  is  true  because  —  because  it  is  true."  And  so  on  and  on  and  on 
throughout  all  the  pages  of  Stoical  ratiocination;  which  it  is  unessential 
to  develop  at  length. ^ 

The  philosophers  perceive  with  regret  that  they  must  look  elsewhere 
for  some  one  to  lay  the  course  of  the  ship;  she  is  beginning  to  drift  help- 
lessly round  in  rings;  or  she  finds  herself  sailing  along  famously  for  a 
time  through  waters  long  since  traversed  in  which  she  had  never  found 
a  port. 

Section  VII  —  Pyrrho 

One  of  the  philosophers  takes  the  helm  from  Zeno  and  begins  —  but 
why  go  on?  Any  man  who  has  ever  sailed  the  philosophic  seas  knows 
his  reckoning  to  the  fraction  of  a  second  at  this  point;  he  knows  that 
there  is  but  one  thing  left  for  the  human  reason  to  do,  and  exactly 
what  that  thing  is.  All  that  is  needed  is  to  open  Sextus  Empiricus 
and  re-read  the  passages  cited  with  reference  to  Protagoras  and  Gorgias, 
and  it  will  be  seen  that  the  rational  processes  which  applied  at  an  earlier 
period  to  the  Nous  of  Anaxagoras,  apply  once  more  with  mathematical 
precision  to  the  criterion  of  Truth  of  a  later  day.  As  Zeller^  points  out, 
there  is  an  intellectual  process  through  which  the  Reason  must  move 
with  reference  to  the  subjective  criterion  of  Truth,  analogous  to  that 
through  which  it  moved  with  reference  to  the  objective  Nous,  or  Reason, 
of  Pre-Socratic  thought.  In  other  words,  when  the  subjective  prin- 
ciple of  Protagoras  is  applied  to  the  objective  Nous  of  Anaxagoras,  it 


*  Lagrtius,  Zeno.    Sertus,  Adv.  Log.  VIII.  397.    Cicero  Acad.  I.,  11.   Zeller,  Stoics  and  Epicureans  p.  1 
Lewes  History  of  Philosophy,  p.  288,  at  seq. 

•  Pre-Socratic  Philosophy.     Vol.  II.,  p.f40i.     Note  i. 


498  Philosophy  Pt.  IV 

becomes  evident  that  there  is  no  such  thing;  and  that  Reason,  or  Intel- 
Hgence,  can  be  rationally  conceived  as  individual,  human  opinion  alone. 
Now,  this  same  subjective  principle  applied  to  the  criterion  of  truth, 
however  conceived,  whether  as  the  generic,  rationalized  abstraction  of 
Plato,  the  experimental  generalization  of  Aristotle,  the  sense  perception 
of  Epicurus,  the  cataleptic  apprehension  of  the  Stoics,  or  these  in  any 
combination,  shows  that  there  is  no  such  thing  as  a  criterion  of  truth; 
and  that  all  rationally  conceivable  truth  must  be  resolvable  once  more 
into  the  opinion  of  the  individual  human  subject:  in  other  words,  into 
an  indefinite  series  of  finite  relations. 

And  here  it  may  be  seen  that  subjective,  Post-Socratic  thought  is 
essentially  nothing  but  a  repetition  of  the  processes  of  objective,  Pre- 
Socratic  thought.  Thales  begins  the  first  era  with  the  question:  What 
is  the  objective  world?  Socrates  begins  the  second  era  with  the  ques- 
tion: What  is  the  subjective  world?  All  the  answers  evolved  in  the 
first  era  culminate  in  Atomism  and  Skepticism.  In  the  second  era 
Plato  reproduces  the  ultra-sensible  ratiocination  of  the  Eleatics,  Aris- 
totle reformulates  the  psycho-physical  method  of  Anaxagoras,  in  a 
subjective  presentation  of  the  objective  Reason.  Epicurus  redevelops 
the  sense-perception  of  Democritus,  which  resolves  itself  once  more 
into  Atomism,  while  the  Skeptics  repeat  the  subjective  conceptions  of 
Gorgias  and  Protagoras.  Post-Socratic  thought  is  a  repetition  of 
the  rings  of  Pre-Socratic  thought,  devoted  to  subjective  instead  of 
to  objective  analysis,  and  culminates  in  identically  the  same  positions  — 
Atomism  and  Skepticism. 

The  rational  mind  at  this  point  in  inquiry  has  no  resource  but  to 
begin  to  repeat  the  mental  processes  already  developed  by  the  Sophists: 
to  recognize  the  fact  that  there  is  no  criterion  of  truth,  and  that  the 
attitude  known  as  the  suspension  of  judgment  is  the  only  rational  one. 

Pyrrho  dominates  the  only  thought  there  is  at  this  period  of  specula- 
tion. He  left  no  writings,  but  his  position  and  that  of  his  followers,  the 
later  Skeptics,  may  be  formulated  from  the  pages  of  Sextus^  andLaertius.'-* 

The  Five  Skeptical  Modes  of  Doubt,  or  Suspension  of  Judgment. 

I.  Contradiction  II.  Progression  to  Infinity.  III.  The  Criss- 
Cross,  or  Vicious  Circle.    IV.    Hypothesis.     V.     Relativity. 

I.    Contradiction,    The  fact  that  different  contradictory  opinions 

I  Pyrrh.  Hypot.  I.  164. 
»  IX.  2. 10. 


Bk.  IV  Attic  Philosophy  499 

are  everywhere  found,  both  in  conventional  Hfe  and  philosophic  thought, 
naturally  leads  to  Doubt,  or  suspension  of  judgment.  If  certain  opinions 
among  these  contraries  are  selected  as  true,  the  validity  of  the  choice 
must  be  demonstrated,  and  the  second  mode  of  suspension  appears, 

II.  Progression  to  Infinity.  Every  proof  offered  in  demonstration 
of  an  opinion  requires  demonstration  itself  or  remains  without  value 
as  proof.  Thus  every  proof  urged  requires  another  proof,  which  must 
lead  to  an  endless  series  or  culminate  in  a  position  without  support; 
that  is,  in  the  suspension  of  judgment.  The  dogmatist  may  attempt 
to  avoid  the  progression  to  infinity  by  means  of  demonstrating  the 
rational  by  the  sensible,  or  vice- versa;  in  this  case,  we  meet  the  third 
mode  of  suspension. 

III.  The  Criss-Cross,  or  Vicious  Circle.  The  dogmatist  who  proves 
a  mental  conception  by  means  of  an  appeal  to  the  evidence  of  the  senses 
must  next  proceed  to  demonstrate  the  validity  of  the  sense  impression. 
If  he  does  this  by  means  of  a  proof  derived  from  sense,  he  falls  into  the 
endless  progression.  If  he  demonstrates  it  by  means  of  another  mental 
conception,  he  begins  to  move  in  a  circle,  or  to  demonstrate  by  means 
of  that  which  requires  demonstration.  The  dogmatist  may  then  assume 
the  existence  of  an  established  or  universal  truth;  that  is,  one  which 
requires  no  demonstration.  In  this  case  we  meet  the  fourth  mode  of 
suspension. 

IV.  Hypothesis.  The  assumption,  as  a  means  of  demonstration, 
of  an  undemonstrated  hypothesis  is  rationally  untenable;  for  that 
position  to  which  all  others  are  to  be  referred  is  in  peculiar  need  of 
support.  But  although  such  an  assumption  is  admitted,  it  is  obviously 
without  application  as  a  means  of  demonstration;  for  it  may  be  balanced 
with  an  opposed  hypothetical  assumption  of  identical  value;  posited 
through  the  same  right  of  arbitrary  adoption.  The  dogmatist  may 
then  present  the  only  remaining  position.  He  may  choose  to  regard 
his  hypothetical  assumption  as  self-evident,  and  decline  either  to  sup- 
port it  with  other  evidence  or  to  admit  the  possibility  of  an  opposed 
hypothesis.  Dogma  can  go  no  farther;  this  is  its  last  resource.  This 
case,  where  demonstration  and  the  possibility  of  contradiction  are 
denied,  presents  the  fifth  mode  of  suspension. 

V.  Relativity.  Every  mental  conception  can  exist  but  in  relation 
to  sensible  objects  or  to  other  mental  conceptions.  Every  impression 
derived  through  the  senses  can  exist  alone  in  relation  to  object  or  sub- 
ject.    Independently  of  such  relations  neither  mental  conception  nor 


500  Philosophy  Pt.  IV 

sense  impression  is  conceivable  or  capable  of  being  perceived;  for  their 
conception  or  perception  implies  a  subject  and  an  object;  that  is,  a 
relation.  The  result  is  that  every  position  adopted,  whether  sensible 
or  intelligible,  must  imply  a  relation  to  something  else,  and,  consequently, 
take  its  place  in  a  series  of  relations  in  which  the  independently  and 
arbitrarily  absolute  can  play  no  part;  no  criterion  of  truth  is  therefore 
possible. 

The  essentials  of  scientific  Doubt  might  be  reduced  to  the  two  follow- 
ing positions.  The  human  subject  has  but  two  means  of  coming  in 
contact  with  that  which  is  external  to  it,  in  other  words,  of  knowing 
an  object;  these  are  Sense  and  Reason.  An  object  must  be  known  either 
through  itself  or  through  others.  It  is  impossible  to  know  an  object 
through  itself;  for  objects  make  different  impressions  upon  different 
subjects;  and  Sense  and  Reason  contradict  each  other.  Nor  can  one 
know  an  object  through  any  other;  for  all  demonstration  can  but  lead 
to  an  infinite  series  of  generalizations  or  sense  impressions;  to  the  criss- 
cross of  indefinitely  proving  one  by  the  other,  or  to  the  vicious  circle 
of  proving  one  by  another  of  the  same  kind.  With  the  elimination 
of  these,  all  demonstration  but  leads  to  an  undemonstrated  arbitrary 
hypothesis.  Thus  every  criterion  of  truth  is  impossible.  If  admitted 
without  demonstration,  the  hypothetical  or  relative  is  presented;  if 
demonstration  is  attempted,  an  infinite  series  of  generalizations  is 
entered. 

The  Skeptics  are  thinking  men  of  intelligence,  familiar  with  all  the 
intricacies  of  earlier  thought.  They  have  atomized  with  Democritus, 
sophisticized  with  Protagoras,  greeted  the  eager,  earnest  Socrates  as 
the  rising  sun  of  a  new  day.  They  have  embarked  with  Plato,  done 
what  they  could  to  find  the  "Good"  and  the  "True"  without  success; 
they  have  worked  with  Aristotle,  only  to  find  themselves  adrift  on  a 
shoreless  sea.  They  have  visited  the  island  of  Epicurus;  and,  had  it 
been  satisfactory,  they  would  have  stayed  there.  They  began  over  again , 
and  did  what  they  could  with  Zeno  only  to  find  it  in  vain.  Knowledge 
and  truth,  they  are  compelled  to  admit,  are  but  will-o'-the-wisps  which 
vanish  as  they  are  approached;  but  rainbows  which  human  mind  and 
human  hand  may  never  seize.  This  is  rational,  scientific  Skepticism: 
the  island  of  quicksands  upon  which  consistent  intellects  are  driven  in 
their  efforts  to  find  the  Truth.  The  whole  history  of  thought  lies  before 
them;    they  have  investigated  every  hope,  exhausted  every  hypothesis, 


Sk.  IV  Attic  Philosophy  501 

and  the  impossibility  of  man's  ever  attaining  to  rational,  self-realiza- 
tion of  the  Absolute  is  the  only  conclusion  they  find.  The  Reason 
number  six  is  now  aground  upon  a  floating  island  of  shoals  and  quick- 
sands, and  the  philosophers  know  that  she  will  never  get  off;  for  the 
Reason  has  sprung  a  leak. 

The  discovery  of  this  island  ends  the  sLxth  voyage  of  speculative 
inquiry  and  the  Reason  number  six  is  falling  quietly  to  pieces  with 
Pyrrho  in  the  stern  gazing  vacantly  into  space.  If  the  Pyrrhonists 
are  asked  to  define  their  position,  they  say  that  they  are  able  to  define 
nothing;  but  add  that  they  do  not  present  even  this  observation  in 
any  sense  as  a  definition. 

Gorgias  and  Protagoras  said  the  same  thing  two  hundred  years  before. 

"Man,"  says  Pyrrho,  "can  see  neither  with  his  eyes  nor  with  his  reason, 
nor  with  any  combination  of  eyes  and  reason.  Man,"  says  Pyrrho^ 
"is  blind."    This  is  the  end  of  Greek  philosophy. 


CHAPTER  III 

MYSTICISM 

Section  I  —  The  Alexandrians.    Section  II  —  Faith. 


Section  I  —  The  Alexandrians 

THE  philosopher  is  discouraged;  his  quest  seems  futile.  Hope 
but  lures  him  ever  on  the  rocks  of  Atomism  or  leaves  him 
on  the  shoals  of  doubt  and  ignorance.  He  hears  of  another 
expedition  fitting  out  for  a  voyage  of  inquiry  and  thinks  he 
may  as  well  see  what  it  is.  He  goes  back  to  the  starting-point,  and 
completes  the  sLxth  cycle  of  philosophic  thought. 

Plotinus  is  at  the  helm  of  the  new  speculative  vessel.  The  philos- 
opher asks  the  name  of  his  craft.  Plotinus  knows,  if  he  calls  her  the 
Reason,  that  the  philosopher  will  decline  to  embark;  the  philosopher 
of  this  period  has  exhausted  the  speculative  possibilities  of  reason. 

"The  name  of  my  craft,"  says  Plotinus,  "is  the  Ecstasy."  There 
was  nothing  else  to  say. 

The  philosopher  looks  her  over.  The  Ecstasy  is  evidently  built 
for  speed  rather  than  a  long  cruise  in  all  weathers.  Her  sail  area  is 
large,  and  the  philosopher  is  afraid  to  ask  her  draught  and  what  ballast 
she  carries.  However  she  is  the  only  thing  afloat  at  present;  and  the 
philosopher  thinks  he  may  as  well  start  in  any  event  as  go  back  to 
the  rocks  and  the  shoals.     Plotinus^  lays  the  course. 

"The  intellect  itself,  entirely  independent  of  either  sense  or  reason, 
is  the  ultimate  Reality,  or  constitutes  true  Being.  Intellect,  therefore, 
is  truly  the  subject's  perception  of  those  things  which  do  not  lie  outside 
of  the  intellect  itself,  the  objects  of  its  perceptions  being  not  external 
to  itself.  The  intellect,  on  the  contrary,  establishes  its  own  laws  and 
conditions,  or  rather  is  itself  the  law  of  its  own  existence.  It  is  conse- 
quently correct  to  say  that  intellectual  perception  and  true  Being  are 
identical;  for  the  knowledge  of  things  independently  of  matter  is  the 
same  as  the  knowledge  of  the  things  in  themselves." 

*  Plotinus  Enn.  V.  ix.  $ ,  p.  232. 

S02 


Bk.  IV  Mysticism  503 

The  philosopher  ponders  —  this  is  strange,  suggestive,  new.  The 
Ecstasy  is  evidently  fast,  very  fast;  she  clears  the  rocks  and  the  shoals 
in  a  moment  and  is  out  in  deep  water  with  a  bound.  The  philosopher 
asks  for  a  little  further  enlightenment,  which  Plotinus^  supplies  as 
follows: 

"If  in  the  perceiver  the  things  perceived  are  contained;  if,  indeed,  they 
are  impressions  of  the  things  seen,  he  will  not  contain  the  things  them- 
selves. But  if  he  possesses  the  things  themselves,  he  does  not  see  them 
through  dividing  himself  (into  the  perceiver  and  the  thing  perceived); 
but  prior  to  the  division  of  himself,  he  both  beheld  and  possessed  them. 
If,  however,  this  be  the  case,  it  is  necessary  that  contemplation  should 
be  the  same  with  the  object  of  contemplation,  and  intellect  the  same 
with  the  intelligible.  For  if  it  is  not  the  same,  there  will  not  be  truth. 
For  unless  this  is  admitted,  he  who  is  said  to  possess  beings  will  only 
possess  an  impression  different  from  beings,  which  is  not  truth.  For 
truth  ought  not  to  be  of  another  thing,  but  that  which  it  says,  that  also 
it  should  be.  Thus,  therefore,  intellect,  the  intelligible,  and  being  are 
one;  and  this  is  the  first  being,  and  the  first  intellect  possessing  beings, 
or,  rather,  it  is  the  same  with  beings.  If,  however,  intelligence  and  the 
intelligible  are  one,  how  on  this  account  does  that  which  is  intellective 
intellectually  perceive  itself?  For  intelligence,  indeed,  as  it  were,  com- 
prehends the  intelligible,  or  is  the  same  with  it.  Intellect,  however, 
which  intellectually  perceives  itself,  is  not  yet  manifest.  But  intelli- 
gence and  the  intelligible  are  the  same;  for  the  intelligible  is  a  certain 
energy,  since  it  is  neither  power,  nor  void  of  life,  nor  again  is  its  life 
adventitious,  nor  its  intellection  in  something  different  from  itself,  as 
in  a  stone,  or  a  certain  inanimate  thing,  and  it  is  also  the  first  essence. 
If,  therefore,  it  is  energy,  and  the  first  energy,  intelligence  likewise  will 
be  most  beautiful  and  will  be  essential  intelligence.  For  intelligence 
of  this  kind  is  most  true,  it  is  the  first  and  subsists  primarily,  and  will 
therefore,  be  the  first  intellect.  For  this  intellect  is  not  in  capacity, 
nor  is  this  one  thing,  but  intelligence  another;  since  thus  again,  the 
essential  of  it  would  be  in  capacity.  If,  therefore,  it  is  energy,  and  the 
essence  of  it  is  energy,  it  will  be  one  and  the  same  with  energy.  Since, 
however,  being  and  the  intelligible  are  one  and  the  same  with  energy, 
all  will  be  at  the  same  time  one,  viz.,  intellect,  intelligence,  and  the 
intelligible.  If  therefore,  the  intelligence  of  it  is  the  intelligible,  but 
it  is  the  intelligible,  hence  it  will  itself  intellectually  perceive  itself. 

•  Ploiinus  on  Gnostic  Hypostases  (V.  iii).   Translation  by  Taylor,  Selr.n  Works  of  Plutinus,  p.  ^65. 


504  Philosophy  Pt.  IV 

For  it  will  perceive  itself  by  intelligence,  which  it  is,  and  will  under- 
stand the  intelligible,  which  also  it  is.  According  to  each  of  these, 
therefore,  it  will  intellectually  perceive  itself,  both  so  far  as  it  is  intel- 
ligence, and  so  far  as  it  is  the  intelligible,  and  will  understand  by  intel- 
ligence what  it  is." 

The  foregoing  passage  is  typical  of  the  voyage  of  the  Ecstasy.  As 
Erdmann^  says,  speaking  of  Plotinus,  His  incapacity  for  consistent, 
logical  thought  grows  more  and  more  evident  as  the  Ecstasy  proceeds; 
suffice  it  to  say  that  the  helm  passes  to  Proclus,  who  lays  the  course 
as  follows.    As  Lewes^  well  says,  ''Listen." 

"Mercury,  the  Messenger  of  Jove,  reveals  to  us  Jove's  paternal 
will,  and  thus  teaches  us  science;  and,  as  the  author  of  all  investigation 
transmits  to  us,  his  disciples,  the  genius  of  invention.  The  Science  which 
descends  into  the  soul  from  above  is  more  perfect  than  any  science 
obtained  by  investigation;  that  which  is  excited  in  us  by  other  men  is 
far  less  perfect.  Invention  is  the  energy  of  the  soul.  The  Science  which 
descends  from  above  fills  the  soul  with  the  influence  of  the  higher  Causes. 
The  gods  announce  it  to  us  by  their  presence,  and  by  illuminations,  and 
discover  to  us  the  order  of  the  universe." 

These  then  are  the  knowledge  and  its  sources  of  the  Alexandrian 
mystics.  These  remarks  of  Proclus  are  the  funeral  oration  of  Philos- 
ophy. Proclus  rechristens  the  "Ecstasy,"  the  "Frenzy"  and  steers 
her  straight  for  the  cloud  banks  of  Mysticism  into  which  she  disappears. 

The  philosopher  knows  that  further  inquiry  is  useless,  and  starts 
back  to  the  rocks  and  the  quicksands.  On  the  way  the  winds  blow  him 
on  an  unfamiliar  shore. 

Section  II  —  Faith 

A  group  of  hospitable  inhabitants  helps  him  to  land.  The  sturdy, 
earnest  Augustine,  the  cultured  Clement,  Cyril,  Justin,  Athenagoras, 
and  the  graceful  Lactantius.  Lactantius^  tells  him  that  all  philosophy 
is  but  self-destructive  fatuity,  leading  to  nothing  but  its  own  negation; 
that  human  weakness  and  frailty  must  always  render  its  attempts 
futile.  But,  he  adds,  that  not  even  pure  Skepticism  will  prevail,  for 
it  is  impossible  that  absolutely  nothing  should  be  known. 

To  a  philosopher  who  has  drifted  through  every  speculative  ring 
which  thought  has  developed  up  to  this  point,  but  to  find  himself  reduced 

1  History  of  Philosophy,  Vol.  i.,  p.  241. 

'  Biographical  History  of  Philosophy,  p.  335.     Translation  by  Lewes. 

*  Divin.  Inst.  III.  4,  p.  155. 


Bk,  IV  Mysticism  505 

to  Atomism  and  Skepticism  as  their  only  results,  this  idea  of  Lactantius 
is  not  without  interest.  No  one  can  be  more  convinced  of  the  vanity 
of  philosophy  than  the  rational  thinker  of  this  period;  no  one  more 
wiUing  to  admit  the  inanity  of  the  action  of  the  speculative  human 
intelligence,  than  the  man  who  has  watched  the  Reason  drift  round  the 
subjects  of  Atomism  and  Skepticism  for  hundreds  of  years  but  to  fall 
into  them  again  and  again  as  moths  that  flutter  round  a  flame. 

The  philosopher  asks  a  few  questions.  He  is  told  that  he  is  on  the 
island  of  Faith,  and  receives  lengthy  and  detailed  explanations  upon 
all  questions.  The  philosopher  is  delighted;  he  thinks  he  has  found  a 
haven  at  last,  and  proceeds  into  the  interior.  On  the  way  he  meets 
another  body  of  men;  a  few  questions  have  suggested  themselves.  He 
asks  if  they  will  explain.  They  do  so  with  great  amiability,  volu- 
bility, and  in  endless  detail;  but  the  philosopher  notes  that  their  ex- 
planations differ  from  those  received.  He  ponders  and  proceeds.  He 
meets  another  body  of  men;  their  replies  again  differ  from  those  re- 
ceived before.  He  asks  why  this  should  be.  He  is  told  that  they, 
the  speakers,  alone  are  in  possession  of  the  "true  faith";  and  that  the 
other  sources  of  information  can  offer  no  safe  guidance.  A  thought 
of  the  quicksands  of  subjective  faith  crosses  the  mind  of  the  philosopher. 

The  philosopher  asks  for  a  little  enlightenment  upon  the  question 
why  they,  the  speakers,  should  alone  be  in  possession  of  the  only  "true 
faith."  He  is  referred  to  the  authorities;  the  authorities  refer  to  the 
books.  The  philosopher  reads  the  books;  all  the  books;  for  he  knows 
that  the  finite  mind,  in  a  land  of  faith  or  anywhere  else,  moves  but 
through  a  series  of  relations,  and  consequently  it  is  impossible  to  know 
one  book  unless  one  knows  all  the  books.  After  the  philosopher  has 
read  the  books,  he  asks  the  authorities  for  further  enlightenment  with 
reference  to  the  origin  of  the  information  contained.  The  authorities 
tell  him  that  they  have  been  inspired  by  divine  revelation.  The  philos- 
opher asks  if  they  are  all  inspired.  The  authorities  scout  the  idea. 
He  asks  which  one  is  inspired,  and  each  authority  points  to  a  different 
book.  "This  book  alone,"  they  say,  "is  really  inspired;  all  others  are 
but  error  and  delusion."    The  philosopher  ponders. 

He  asks  the  authorities,  if  any  given  book  is  inspired,  why  the  other 
books  should  not  be  derived  from  the  same  source.  To  the  philosopher 
this  question  seems  worth  a  moment's  attention  for  the  following  reasons. 
These  books  seem  to  him  made  up  of  two  portions:  One,  consisting  of 
national  or  racial  myth,  legend,  and  poetic  imagery;  another,  consisting 


5o6  Philosophy  Pt.  IV 

of  pure  thought  moving  independently  of  sense  and  reason  about  the 
most  important  problems  of  existence. 

The  first  portion  of  these  books  when  examined  reveals  varying  phases 
of  an  evolutionary  development  revolving  for  the  most  part  round  a 
limited  number  of  fixed  conceptions  such  as:  creations,  golden  ages, 
falls  of  man,  deluges,  confusions  of  tongues,  original  sins,  annunciations, 
virgin  births,  incarnations,  temptations,  redemptions,  descents  into 
the  infernal  regions,  powers  of  darkness,  spirits  of  evil,  atonements, 
sacrifices,  mystical  symbols,  and  so  on  and  so  on.  These  conceptions, 
when  imbedded  in  any  formal  system  of  faith,  seem  chiefly  the  result 
of  a  process  of  selection  or  rejection  in  harmony  with  the  national  mental 
or  political  peculiarities  of  any  given  people  or  ecclesiastical  hierarchy. 
They  may  thus  gradually  become  crystallized  in  a  rigid  and  exclusive 
body  of  ritualistic  dogma,  regarding  all  other  "  faith"  as  the  creation  of 
the  spirits  of  outer  darkness.  These  systems  then  often  begin  to  repeat 
themselves,  and  while  reproducing  at  times  identically  the  same  hier- 
archical or  ritualistic  phenomena,  may  regard  each  other  as  the  incar- 
nation of  the  Evil  One.  They  may  even  try  to  "convert"  each  other 
to  practically  identical  dogmas  in  which  only  linguistic  distinctions  may 
be  found;  or  again,  they  may  formulate  rigid  ritualistic  distinctions; 
and,  while  regarding  each  other  as  anathema,  they  may  simply  be 
reproducing  or  reversing  dogmatic  processes  which  had  already  been 
going  on  in  other  lands  and  other  tongues  for  hundreds  or  thousands 
of  years.  ^ 

This  portion  therefore  of  the  books,  to  the  philosopher,  seems  traceable 
to  a  purely  human  process  of  development,  and  their  agreement  or 
disagreement  a  matter  of  local  or  historical  interest.  By  means  of 
eliminating  this  mass  of  accumulation,  however,  a  definite  body  of  material 
is  found  within  the  books,  presenting  a  different  kind  of  interest  and 
devoted  to  the  fundamental  problems  of  existence. 

When  this  portion  of  the  books  is  submitted  to  a  process  of  compar- 
ative analysis,  most  of  the  books  of  the  land  of  Faith  all  say  very 
much  the  same  things;  about  very  much  the  same  subjects  in 
very  much  the  same  way;  and,  when  translated  into  any  single  tongue, 
in  very  much  the  same  words.  It  seems  to  the  philosopher,  therefore, 
that  they  might  well  be  regarded  as  evolved  from  very  much  the  same 
source.  In  other  words,  it  seems  that  the  great  bulk  of  the  distinctions 
and  differences  of  the  various  systems  of  the  land  of  Faith  is  due  to 

»  For  references  Cf .  p.  363. 


'Bk.  IV  Mysticism  507 

the  interpretations  and  elucidations  of  the  authorities,  and  not  to  the 
original  sources;  and  that  even  those  supposedly  vastly  important  dif- 
ferences and  distinctions  do  little  but  present  an  endless  process  of  repeti- 
tion; revolving  round  certain  fixed  conceptions  common  to  nearly 
all  the  systems  of  faith.  However,  when  the  sources  of  the  various 
systems  of  faith  are  studied,  certain  differences  and  distinctions  are 
apparent,  which  may  be  regarded  as  possessing  vast  cosmic  importance 
or  as  of  not  the  slightest  significance;  in  accordance  with  the  intellectual 
constitution  of  the  observer.  And  here  another  thought  crosses  the 
mind  of  the  philosopher.  If  these  differences  of  the  land  of  Faith 
are  regarded  as  of  vast  import,  and,  consequently,  this  one  or  that 
is  held  with  unapproachable  tenacity,  the  following  considerations  are 
suggested. 

1.  The  good  ship  Reason  has  long  since  been  wrecked  on  a  foreign 
shore;  she  is  pounding  to  pieces  on  the  rocks  of  Atomism  or  sinking  into 
the  quicksands  of  relative  subjectivity  with  Pyrrho  and  the  Skeptics. 
Faith  is  the  guiding  light  at  present;  opinions  are  derived  from  inspired 
sources;  and  consequently,  possess  no  rational  foundations  within  the 
human  mind.  If  opinions  are  based  upon  reason,  they  cease  to  be 
faith  and  require  no  inspired  support.  Different  faiths,  therefore, 
cannot  be  rationally  subjected  to  rational  distinctions:  to  reason  for 
or  against  a  faith  is  as  much  an  anomaly  as  to  attempt  the  demonstra- 
tion of  a  geometrical  problem  with  a  burst  of  impassioned  oratory,  or 
a  flood  of  tears. 

2.  Every  individual,  therefore,  in  the  land  of  Faith  will  have  a 
rational  right  to  adopt  whatever  faith  may  seem  best,  without  being 
subject  to  any  rational  criticism  of  any  kind;  for,  faith,  is  beyond  the 
reach  of  reason.  All  ratiocination,  therefore,  all  expenditure  of  polem- 
ical and  apologetic  energy  with  reference  to  distinctions  in  faith  may 
seem  not  distantly  removed  from  the  wisdom  of  the  serpent  which  chases 
its  own  tail  and  by  no  means  unlikely  to  lead  to  equally  profitable  results. 

3.  The  thought,  therefore,  occurs  to  the  philosopher,  if  any  given 
book  is  inspired  from  sources  other  than  human,  that  there  seems  no 
tenable  reason  why  they  should  not  all  be  inspired;  especially,  when 
regarded  independently  of  the  ecclesiastical  authorities,  as  they  all 
say  very  much  the  same  thing,  or  can  be  interpreted  as  desired.  Thus 
it  seems  that  each  book,  whether  inspired  or  not,  is  the  best  source 
of  cosmical  information  for  any  one  choosing  to  have  faith  in  it ;  and  that 
any  given  faith  can  scarcely  rationally  claim  superiority  over  any  other; 


5o8  Philosophy  Pt.  IV 

for  faith  in  order  to  be  faith  must  be  based  upon  something  other  than 
reason. 

The  philosopher  presents  a  few  of  these  considerations  to  the  authori- 
ties. The  authorities  scout  the  ideas;  they  alone,  they  say,  that  is 
each  particular  authority,  is  in  the  sole  possession  of  the  Truth;  the 
one  and  only  divine  revelation;  the  one  and  only  monopolistic  exploita- 
tion of  the  Divinity.  To  the  poor  philosopher  it  seems  neither  a  very 
inspiring  nor  very  worshipful  Divinity  who  would  reveal  Himself  to 
but  a  small  portion  of  his  creatures  to  the  exclusion  of  all  others.  He 
begs  the  authorities  for  a  little  enlightenment  on  this  question.  The 
authorities  point  to  more  authorities,  and  when  these  apparently  fail  to 
answer  the  question,  they  grow  impatient  and  point  to  the  rack,  the 
gibbet,  and  the  stake.  These  are  the  ultimate  authorities  of  the  period 
on  the  island  of  Faith;  the  final  criteria  of  Truth  for  which  the  poor 
philosopher  had  sought  so  long  and  earnestly.  He  has  little  choice; 
he  patches  up  a  truce  with  the  authorities  or  he  goes  to  his  death  like 
a  man  with  the  thought  of  Socrates  to  console  him,  and  a  sigh  for  the 
days  of  the  cruise  of  the  good  ship  Reason. 

In  any  event,  and  whatever  happens,  the  philosopher  dies;  philosophy 
dies;  and  their  ashes  blend  and  are  swept  into  space  with  the  breath  of 
the  four  winds  of  heaven. 


CHAPTER  IV 

MODERN  PHILOSOPHY 

A  STUDY  of  Hellenic  thought  presents  a  chart  of  the  speculative 
seas  of  antiquity.  The  Alexandrians  develop  nothing  but 
mysticism,  and  lose  themselves  in  a  mysterious  theological 
metaphysics.  Roman  thought  has  no  independent  existence. 
Lucretius  and  Cicero,  %\ath  the  lesser  lights  of  the  Latin  world,  restate 
Greek  problems  and  Greek  solutions.  As  thought  begins  with  the  naive, 
wondering  inquiry  of  Thales,  and  ends  with  the  hopeless,  disillusioned 
doubt  of  Pyrrho,  it  reveals  the  elements  of  all  ancient  speculation.  SLx 
times  has  the  human  Reason  started  upon  its  quest  for  Truth,  and  six 
times  has  it  been  reduced  to  a  purely  mechanical  and  materialistic  con- 
ception of  the  universe  on  one  side;  or  to  a  purely  idealistic  subjectivity 
on  another.  Each  time  it  has  been  with  greater  force,  and  the  wreck  of 
Reason  proportionate.  The  increasing  knowledge  of  succeeding  ages 
has  but  rendered  the  rocks  more  formidable  and  the  shoals  more  shallow 
and  desolate.  Independently  of  these  rocks  and  shoals  the  Reason  has  no 
refuge;  it  but  drifts  round  in  rings  from  one  to  the  other  of  these, 
starting  ever  afresh  only  to  be  wrecked  again  and  again  as  before. 

This  seems  to  be  the  law  governing  ancient  speculation.  It  now  re- 
mains to  discover  the  relation  of  this  law  to  modern  speculation.  In 
order  to  do  this  it  is  necessary  to  present  a  brief  examination  of  modern 
thought  as  a  whole.  Its  movement  and  results  may  then  be  compared 
with  those  of  the  thought  of  the  past.  The  present  study  is  not  a  history 
of  philosophy,  it  is  an  attempt  to  determine,  if  possible,  the  laws  govern- 
ing the  action  of  the  speculative  intellect.  For  the  sake  of  brevity,  there- 
fore, the  voyage  through  the  modern  philosophic  seas  will  be  but  one  of 
verification,  not  of  discovery.  It  will,  consequently,  not  be  necessary 
to  trace  the  development  of  each  movement  of  thought;  the  culminating 
point  of  each  is  all  that  is  required.  A  thousand  volumes  lie  open  through 
which  these  movements  may  be  traced  in  detail;  results  alone  are  here 
sought.  The  voyage  of  discovery  may  be  undertaken  by  means  of 
reference  to  the  works  of  the  original  thinkers  or  with  the  aid  of  a  philo- 
sophic historian,  such  as  Erdmann,  Lewes,  or  any  of  the  abler  writers  on 

S09 


510  Philosophy  Pt.  IV 

the  subject.  Lewes  is  here  chiefly  cited  on  account  of  his  ability  in  the 
analysis  and  expression  of  philosophic  thought  in  lucid  English. 

A  study  of  the  efforts  of  the  human  Reason  through  another  period  of 
inquiry  meets  the  Middle  Ages  with  an  arid  waste  of  ecclesiastical 
authority  and  mediasval  scholasticism:  no  more  desolate  picture  is  con- 
ceivable to  a  philosopher.  The  Dark  Ages,  dominated  by  ignorant 
mystico-theological  dogma,  interpretation,  and  Aristotelian  quibblings, 
stretch  away  in  every  direction;  nothing  else  can  be  seen:  the  Reason 
has  no  existence.  The  desert  stretches  over  more  than  a  thousand  years 
from  the  days  of  the  great  Athenians;  nearly  half  a  hundred  of  the 
generations  of  men  have  been  swept  by  the  looms  of  life,  as  it  were,  for  a 
moment  into  being  and  back  again  into  the  night;  without  a  gleam  of 
rational  intelligence  to  lead  them  on  their  way. 

A  dull  and  feeble  spark  begins  to  glow  in  the  fog  and  the  desert,  toward 
the  close  of  the  eleventh  century,  and  Abelard  "  'transgressed^  the  Umits 
of  his  forefathers'  by  the  composition  of  the  treatise  Sic  et  Non,  the  object 
of  which  was  to  cite  the  passages  of  Scripture  and  the  Fathers,  pro  and 
con  upon  every  important  topic:  this  collocation  of  contradictory  state- 
ments given  by  the  highest  possible  authorities  was  meant,  as  Abelard 
distinctly  informs  us,  to  train  the  mind  to  vigorous  and  healthy  doubt,  in 
fulfilment  of  the  injunction,  'seek,  and  ye  shall  find;  knock,  and  it  shall 
be  opened  unto  you.'  .  .  .  Whatever  his  intention  may  have  been, 
the  result  of  such  a  work  was  clearly  foreseen  by  theological  teachers,  who 
regarded  doubt  as  damnable,  and  would  not  tolerate  it  under  the  plausi- 
ble aspects  of  intellectual  gymnastics,  or  the  love  of  seeking  for  truth. 
But  theologians  were  unable  to  arrest  the  development  of  speculation. 
Doubt  began;  disputation  waxed  stronger;  logic  played  like  lambent 
flame  around  the  most  sacred  subjects;  Scholasticism  entered  every 
city  in  Europe,  and  filled  it  with  subtle  disputants." 

No  better  description  of  Scholasticism  can  be  found  than  that  of 
Tyndall:^  "As  a  traveller  without  a  compass  in  a  fog  may  wander  long, 
imagining  he  is  making  way,  and  find  himself  after  hours  of  toil  at  his 
starting-point,  so  the  schoolmen,  having  '  tied  and  untied  the  same  knots, 
and  formed  and  dissipated  the  same  clouds,'  found  themselves  at  the  end 
of  centuries  in  their  old  position." 

The  leaven  begins  to  work,  however;  the  spark  of  Reason  to  glow; 
if  flickers  and  flutters  here  and  there  until  stamped  out  by  the  author- 

>  Lewes'  History  of  Philosophy,  p.  360. 
•  Fragments  of  Science  Vol.  II.,  p.  147. 


Bk.  IV  Modern  Philosophy  511 

ities  in  the  fulness  of  their  wisdom,  as  soon  as  it  sheds  any  light.  But 
Roger  Bacon  lives  and  labours  for  the  truth  in  England,  and  spends  a 
portion  of  his  life  in  prison  in  consequence;  Copernicus  and  Galileo  are 
born;  the  first  is  ridiculed  after  his  death,  the  second  compelled  to  re- 
tract his  discoveries.  The  spark  of  Reason  falters  here  and  there  with 
the  little  known  names  of  the  Middle  Ages  and  the  Revival  of  Learning, 
until  it  bursts  into  reaHty  as  the  flame  flashes  round  a  stake  on  the 
Campo  dei  Fiori  at  Rome,  and  licks  up  all  that  is  mortal  of  Giordano 
Bruno. 

But  the  flame  is  at  work  in  other  directions.  It  is  stamped  out  in  one 
place  but  to  start  anew  elsewhere.  Another  great  man  bearing  the  name 
of  Bacon  appears;  he  formulates  a  more  thorough  system  of  knowledge 
and  method  of  inquiry;  he  is  known  as  the  father  of  experimental  philos- 
ophy. About  the  same  time,  another  man  begins  to  "inquire,  to  won- 
der, and  to  doubt."  The  Cartesian  method  is  conceived.  The  world 
moves  on.    Another  thinker  seizes  the  torch. 

"The  only  novelty  in  Spinoza's  Method,"  says  Lewes,i  "is  that  it  is  a 
further  development  of  the  Method  of  Descartes.  Descartes  thought 
that  the  Mathematical  Method  was  capable  of  being  applied  to  meta- 
physics, but  he  did  not  apply  it ;  Spinoza  did  apply  it.  This  may  seem  a 
trifling  addition :  in  reality  it  was  the  source  of  all  the  differences  between 
Spinoza  and  his  teacher.  Descartes'  principles  will  inevitably  lead  to 
Spinoza's  system,  if  those  principles  are  rigorously  carried  out.  But 
Descartes  never  attempted  the  rigorous  deduction  of  those  consequences, 
which  Spinoza,  using  the  mathematical  method,  calmly  and  inflexibly 
deduced.  Those  who  rebel  at  the  conclusions  drawn  must  impugn  the 
premises  from  which  they  are  drawn;  for  the  system  of  Spinoza  is  neither 
more  nor  less  than  a  demonstration." 

Lewes  presents  a  clear  analysis  of  both  method  and  demonstration. 
The  following  is  his  conclusion r^  "We  have  witnessed  the  mathematical 
rigour  with  which  it  is  developed;  we  have  followed  him  step  by  step, 
dragged  onward  by  his  irresistible  logic;  and  yet  the  final  impression 
left  on  our  minds  is  that  the  system  has  a  logical  but  not  a  vital  truth. 
We  shrink  back  from  the  consequences  whither  it  so  irresistibly  leads  us; 
we  gaze  over  the  abyss  to  the  edge  of  wliich  we  have  been  dragged,  and 
seeing  nought  but  chaos  and  despair,  we  refuse  to  build  our  temples 
there.    We  retrace  our  steps  with  hurried  earnestness,  to  see  if  no  false 

'  Ibid.,  p.  473. 
'  Ibid.,  p.  485. 


512  Philosophy  Pt.  IV 

route  has  been  taken;  we  examine  every  one  of  his  positions,  to  see  if 
there  be  not  some  secret  error,  parent  of  all  other  errors.  Arrived  at  the 
starting-point,  we  are  forced  to  confess  that  we  see  no  error  —  that  each 
conclusion  is  but  the  development  of  antecedent  positions;  and  yet,  in 
spite  of  this,  the  mind  refuses  to  accept  the  conclusions." 

The  student  of  Hellenic  thought  knows  what  has  happened  when 
Spinoza  appears  in  modern  speculation.  The  human  reason  has  struck 
the  Atomic  rocks  once  more;  they  may  be  given  different  names;  mov- 
ing matter  may  be  called  substance  with  a  large  S,  or  even  God,  why 
not?  The  real  philosopher  is  interested  in  things,  not  in  names,  and 
he  knows  that  he  here  finds  another  rationally  demonstrated  island 
rising  out  of  the  seas  of  speculation,  of  identically  the  same  geological 
formation  as  those  of  Diogenes,  of  Appolonia,  Democritus,  and  Epicurus. 
The  island  has  another  name  —  that  is  the  only  difference.  "The 
adequate  ideas,  as  component  parts  of  the  intellectus  infinitus,^^  says 
Erdmann,^  "are  eternal;  only  the  fragments  of  them  pass  away.  Ac- 
cordingly the  greater  the  number  of  adequate  ideas  which  go  to  make 
up  a  man's  mind  —  which  in  turn  will  depend  upon  the  perfection 
with  which  his  body  is  organized  —  the  larger  will  be  the  part  of  him 
that  is  eternal,  the  less  reason  will  he  have  to  be  afraid  of  death.  (Those 
who  find  in  these  last  sentences  a  personal  God,  personal  immortality, 
and  ever  so  much  besides,  must  not  forget  that,  according  to  Spinoza's 
express  declaration,  God  has  neither  understanding  nor  will."  A  god 
without  understanding  or  will  presents  once  more  the  long  familiar 
<p6acq  SXo'foq  of  Democritus. 

Spinoza  seems  to  have  been,  like  Democritus  and  Epicurus,  a  great 
and  good  man  with  a  mathematically  accurate  intelligence,  and  when  a 
perfectly  rational  intelligence  develops  a  system  of  cosmological  inquiry, 
it  moves  with  mathematical  precision  to  Greek  conceptions  of  the 
phenomenal  world.  Yet,  if  Spinozism  is  not  accepted  at  this  juncture, 
what  'resource  remains?  The  Cartesian  hypothesis  and  method 
leads  to  the  system  of  Spinoza  as  their  inevitable  result.  If  the 
Cartesian  method  is  rejected,  the  mind  has  no  starting-point  in  this 
line  of  inquiry.  It  is,  therefore,  at  this  point  in  modern  thought 
reduced  to  Spinozism  or  an  inarticulate  Skepticism.  All  the  phe- 
nomena of  Hellenic  thought  here  begin  to  repeat  themselves.  This 
is  the  first  crisis  in  modem  speculation.  The  reason  has  no  escape; 
it  must  accept  Spinozism  or  reject  the  foundations  upon  which    th^ 

Erdmann  History  of  Philosophy.     Vol.  II.,  p.  87. 


Bk.  IV  Modern  Philosophy  513 

only  rational  thought  of  the  period  was  built  —  Rings,  Atomism, 
and  Skepticism  again. 

"The  doctrine  of  Spinoza,"  says  Lewes, ^  "was  of  great  importance, 
if  only  because  it  brought  about  the  first  crisis  in  modern  Philosophy. 
His  doctrine  was  so  clearly  stated,  and  so  rigorously  deduced  from  admit- 
ted premises,  that  he  brought  philosophy  into  their  dilemma. 

"Either  my  premises  are  correct,  and  we  must  admit  that  every  clear 
and  distinct  idea  is  absolutely  true;  true,  not  only  subjectively,  but 
objectively;  —  If  so,  my  system  is  true: 

"Or my  premises  are  false;  the  voice  of  Consciousness  is  not  the 
voice  of  truth;  and  if  so,  then  my  system  is  false,  but  all  Philosophy 
is  impossible:  since  the  only  ground  of  Certitude  —  our  Consciousness 
—  is  pronounced  unstable,  our  only  means  of  knowing  the  truth  is 
pronounced  fallacious. 

"Spinozism  or  Skepticism?  Choose  between  them  for  you  have  no 
other  choice.'" 

Here  is  a  complete  crisis.  The  mind  must  go  back  and  begin  over 
again  with  another  method.  If  the  mind,  developing  the  Cartesian 
method,  culminates  in  Spinozism  and  refuses  to  accept  his  conclusions, 
it  must  turn  its  attention  to  psychological  investigation  in  order  to 
pronounce  upon  its  own  qualifications  to  deal  with  the  fundamental 
problems  of  existence. 

Thought  here  begins  again  with  two  newly  formed  rings  behind  it. 
The  threads  of  the  inductive  experimental  method  of  Bacon  may  be 
taken  up.  Bacon  was  born  in  the  last  half  of  the  Sixteenth  Century 
(1561);  Descartes  toward  the  close  of  the  same  period  (1596),  Spinoza 
in  1632.  The  Cartesian  method  exhausts  itself  within  Spinoza,  and 
the  rocks  and  shoals  once  more.  In  beginning  again  thought  enters 
the  second  period  of  modern  philosophy.  What  are  its  results?  After 
two  or  three  generations  of  scientific  inquiry',  each  position  formulated 
leading,  naturally  and  necessarily,  into  another,  speculation  again  culmi- 
nates with  the  leaders  of  eighteenth-century  thought  in  France.  The 
following  is  from  Erdmann:^  "Diderot's  atheism  comes  out  most  openly 
in  the  Interpretation  de  la  Nature  and  in  the  Conversation  with  d'Alembert. 

.  .  .  Here  he  developes  his  theory  (Buff'on's)  of  living  molecules, 
the  union  and  separation  of  which  produce  the  material  transformation, 
or  life  of  the  xmiverse;  here  is  found  his  reduction  of  all  psychology  to 


'  History  of  Philosophy,  p.  493. 
History  of  Philosophy,  Vo\.  11.,  pp.  164. 165. 


514  Philosophy  Pt.  IV 

physiology  of  the  nerves;  here,  too,  his  arguments  against  freedom  and 
immortality  .  .  .  here  his  gibes  against  those  who  assume  the  ex- 
istence of  a  personal  God,  and  do  not  believe  that  the  great  musical 
instrument,  we  call  the  world,  plays  itself," 

Here  is  the  uXtxif)  avayxiQ  of  Hellenic  materialism.  ''It  was,"  continues 
Erdmann,  "according  to  his  own  statement  through  Diderot,  that  the 
physician,  Julian  Off  ray  de  Lamettrie,  was  first  encouraged  to  become  an 
author.  His  Histoire  Naturelle  de  I'Ame,  1745  (certainly  his  most  solid 
work),  along  with  a  satirical  piece  of  writing  against  his  colleagues, 
brought  about  his  expulsion  from  France,  as  his  /  'Homme  Machine  did 
from  Holland.  He  was  then  summoned  to  Berlin  by  Frederick  the  Great; 
and  there,  in  the  capacity  of  Reader  to  the  King,  and  —  as  Voltaire 
wittily  said — court-atheist,  he  composed  a  large  number  of  works.  .  .  . 
In  all  of  these  he  teaches  the  most  thorough-going  atheism  and  material- 
ism, and  calls  religion  the  disturber  of  the  peace,  which  keeps  individuals 
from  enjoyment,  and  society  from  unity.  A  State  of  atheists  pure  and 
simple  would  not  merely  be  possible,  as  Bayle  surmised;  it  would  be 
the  happiest  of  all.  What  is  called  mind  is  a  part  of  the  body,  namely 
the  brain,  which,  on  account  of  its  finer  muscles,  gives  birth  to  finer 
products  than  the  extremities.  When  it  ceases  to  be  active,  "la 
farce  estjoueef' 

The  Attic  philosopher  would  know  his  reckoning  exactly  at  this 
point;  it  is  unnecessary  to  investigate  farther.  The  reason  is  repeating 
itself  over  and  over  again.  The  Attic  philosopher,  however,  would 
probably  realize  that  this  was  only  one  phase  of  the  results  of  the  physio- 
logical, experimental  method;  there  is  a  corresponding  idealistic  Skep- 
ticism due  about  this  period,  developed  through  investigation  dealing 
with  the  intellect  rather  than  with  matter. 

The  period  is  toward  the  close  of  the  eighteenth  century.  The 
inquirer  goes  back  to  the  starting-point  once  more  with  Hobbs  and 
Locke;  watches  the  good  Bishop  of  Cloyne  diverge  into  a  purely  idealistic 
system,  and  predicts  the  result.  The  heirs  of  this  line  of  inquiry  are 
Hume  and  Kant. 

In  the  Inquiry  Concerning  Human  Understanding^  is  found:  "The 
most  perfect  philosophy  of  the  natural  kind  only  staves  off  our  ignorance 
a  little  longer:  As  perhaps  the  most  perfect  philosophy  of  the  moral 
or  metaphysical  kind  serves  only  to  discover  larger  portions  of  it.  Thus 
the  observation  of  human  blindness  and  weakness  is  the  result  of  all 

•  Vol.  II.     Sect.  IV.     Part  I.,  p.  27. 


Bk.  IV  Modern  Philosophy  515 

philosophy,  and  meets  us,  at  every  turn,  in  spite  of  our  endeavours  to 
elude  or  avoid  it." 

The  Attic  philosopher  finds  familiar  shores  again.  He  sees  another 
essay  by  the  same  author,  entitled:  The  Skeptic,^  "If  we  can  de- 
pend upon  any  principle,  which  we  learn  from  philosophy,  this,  I  think, 
may  be  considered  as  certain  and  undoubted,  that  there  is  nothing, 
in  itself,  valuable  or  despicable,  desirable  or  hateful,  beautiful  or  de- 
formed; but  that  these  attributes  arise  from  the  particular  constitution 
and  fabric  of  human  sentiment  and  affection."  The  Attic  philosopher 
seems  to  hear  Protagoras  say:    IldvTwv  ■xpiriixdxwv  jJ-sTpov  avOpwxo!;. 

Kant^  says  in  concluding  the  Critique  of  Pure  Reason,  that  we  have 
to  deal  with  but  two  questions  in  a  canon  of  pure  reason:  "Is  there  a 
God;  is  there  a  future  life?"  He  continues:  "But  from  these  two 
great  objects,  for  the  attainment  of  which  all  these  efforts  of  pure  rea- 
son have  been  undertaken,  we  remain  as  far  removed  as  though  our 
labours  had  been  declined  at  the  outset.  So  far  as  knowledge  is  con- 
cerned, this  much  at  least  is  certain  and  established,  that  with  reference 
to  these  two  questions,  God  and  Immortality,  knowledge  can  never  be 
ours!"  Protagoras  said  precisely  the  same  thing  over  two  thousand 
years  ago. 

The  Attic  thinker  would  be  at  home  at  this  juncture  in  modern  thought. 
He  would  find  speculation  repeating  the  conclusions  of  his  friends, 
Epicurus  and  Pyrrho;  one  would  be  repeated  by  the  Encyclopedists, 
or  the  "court  atheist"  at  Sans  Souci,  the  other  by  the  methodical  philos- 
opher of  Konigsberg  or  the  historian  of  England.  A  later  age,  later 
demonstrations  of  identical  conclusions;  there  would  be  no  other  dif- 
ference. 

Another  series  of  rings  and  repetitions  are  formed  as  a  result  of  the 
inquiry  of  the  second  period  of  modern  philosophy.  Another  crisis,  and 
another  process  of  repetition  begins;  for  Kant  does  not  stop  with  the 
^'Fure  Reason"  and  the  philosopher  follows  again  with  the  "Practical 
Reason"  into  the  thick  of  the  German  metaphysics  of  the  last  century. 
He  drifts  along  for  a  time,  but  not  without  a  troubled  sense  of  being 
lured  into  land-locked  waters,  bound  by  preconceived  theological  shores. 
The  rational  thread  of  ideas  grows  more  and  more  attenuated;  and  at 
last  snaps  and  vanishes.  The  philosopher  is  able  to  follow  no  longer  and 
is  strangely  reminded  of  the  cruise  of  the  "Ecstasy." 

»  Vol.  I.,  p.  ai6. 

*  Kritik  der  Reinen  Vernuft,  pp.  579,  580. 


5i6  Philosophy  Pt.  IV 

"Plotinus,"  says  Lewes, ^  "shrank  from  no  extravagances:  where 
Reason  failed,  there  he  called  upon  Faith.  The  Germans,  coming 
after  the  secure  establishment  of  Positive  Science,  found  Philosophy 
in  a  similar  dilemma:  either  to  declare  itself  incapable,  or  to  proclaim 
its  despotism  and  infallibiUty:  what  Logic  demonstrated  must  be  ab- 
solutely true. 

"This  faith  in  logic  is  remarkable,  and  may  be  contrasted  with  the 
Alexandrian  faith  in  Ecstasy.  Of  the  possibility  of  human  logic  not 
being  the  standard  of  truth,  the  Germans  have  no  suspicion;  they  are 
without  the  Greek  skepticism  as  to  the  Criterium.  .  .  ,  The  history 
of  modern  metaphysical  philosophy  is  but  the  narrative  of  the  same 
struggles  which  agitated  Greece.  The  same  problems  are  revived,  and 
the  same  answers  offered." 

Teutonic  mystics  and  metaphysics  seem  to  have  been  as  powerless 
as  those  of  Alexandria  to  hold  the  attention  of  consistent  thinkers. 
Thus  the  labours  of  earlier  modern  speculation  but  culminate  in  thorough- 
going Materialism  and  Skepticism,  or  fade  away  into  thought  lacking 
the  capacity  of  exact  formulation.  As  says  Sir  Leslie  Stephen, ^  in  his 
essay  on  the  Vanity  of  Philosophizing:  "We  cannot  accept  Descartes, 
or  Spinoza,  or  Leibutz,  or  Bacon,  or  Hobbs,  or  Locke,  as  giving  satis- 
factory or  even  coherent  systems,  or  as  having  done  more  than  lead  to 
the  thorough  skepticism  of  Hume.  If  Kant  presented  one  solution  of 
the  difficulties  in  which  philosophy  was  landed,  we  have  still  to  ask  what 
precisely  Kant  meant;  whether  his  criticism  was  simply  all-destructive, 
or  really  left  anything  standing,  and,  if  so,  what  it  left  standing;  and 
who  represents  the  proper  line  of  development?" 

There  seems  nothing  to  be  done  at  this  point  but  to  note  the  formation 
of  another  series  of  rings;  go  back  to  the  beginning  and  start  again. 
A  few  thinkers  will  be  found  attempting  to  establish  a  "psychological" 
method;  after  a  generation  or  two  the  present  is  reached.  The  fol- 
lowing citation  is  from  the  pen  of  Professor  Haeckel  '.^ 

"Pantheism  regards  God  and  the  world  as  a  unity.  The  idea  of 
God  becomes  identical  with  that  of  Nature  or  Substance.  This  Panthe- 
istic view  of  the  world  is  in  sharp  contrast  to  all  forms  of  Theism.  .  .  . 
There  always  remains  the  fundamental  distinction  between  the  two, 
that  in  Theism,  God  is  contrasted  with  Nature  as  an  extratnundane  being, 


»  Bislory  of  Philosophy,  pp.  325,  328. 
»  Social  Rights  and  Duties,  Vol.  II.,  p.  if 
»  Die  Weltmhsel.  p.  333,  335- 


Bk.  IV  Modern  Philosophy  517 

creating  and  sustaining  the  world,  and  acting  upon  it  from  without; 
while  in  Pantheism,  God  as  an  intramundane  being  is  identified  with 
Nature  itself  and  regarded  as  co-extensive  with  substance  as  force  or 
energy." 

Haeckel  traces  the  pantheistic  conception  of  nature  from  Anaxam- 
ander,  through  Democritus,  Heraclitus,  and  Empedocles.  He  shows  how 
Lucretius  repeats  it  in  the  Latin  world.  Bruno  again  in  the  sixteenth 
century,  Spinoza  in  a  later  age;  eighteenth-century  materialism  is  the 
same  thing  over  again  and  modern  science  repeats  it  once  more  to-day. 

"Atheism,"  he  continues,  "recognizes  no  gods  and  goddesses  if  by 
this  is  understood  personal,  extramundane  beings.  This  'godless  world- 
system'  is  but  another  expression  of  the  Monism,  or  Pantheism,  of 
modern  science  presenting  its  negative  aspect;  the  non-existence  of  an 
extramundane  or  supernatural  Divinity.  In  this  sense  Schopenhauer 
has  well  said,  'Pantheism  is  but  a  polite  atheism.'  The  truth  of  Pan- 
theism is  the  elimination  of  the  dual  antithesis  between  God  and  the 
world,  in  recognizing  that  the  world  exists  through  itself  and  its  own 
forces.  The  Pantheistic  maxim:  God  and  the  world  are  one,  is  but  a 
polite  way  of  bidding  the  Almighty  farewell." 

The  philosopher  hears  the  ring  of  the  consistent  thought  of  the  first 
Diogenes,  of  Democritus,  of  the  good  Epicurus  and  much,  as  Haeckel  says, 
of  Anaximander,  Heraclitus,  and  Empedocles.  It  seems  at  times  in 
reading  the  Welirdthsel  that  the  majestic  Lucretius  had  dropped  his  own 
long,  rhythmic  line  and  continued  his  exposition  in  modern  prose. 
Professor  Haeckel  presents  the  latter-day  forms  of  the  materialistic  or 
monistic  conception  of  the  universe.  Atheistic  monism  or  materialism 
wiU  not  appeal  to  all  minds;  phases  of  rationalized  Doubt  should 
appear  on  another  side. 

Fw  Huxley,  as  articulate  an  intelligence  as  the  nineteenth  century  devel- 
oped, rejects  pure  materialism,  and  when  asked  to  define  his  position 
formulates!  that  of  "Agnosticism:"  he  says  he  knows  nothing  of  the  ulti- 
mate problems  of  the  universe.  This  then  is  the  result  of  twenty-five 
hundred  years  of  speculation  and  the  field  may  be  reviewed. 

In  a  study  of  Hellenic  thought,  it  seemed  that  a  law  was  found  govern- 
mg  the  action  of  the  philosophic  intellect.  This  law  showed,  apparently, 
that  the  development  of  every  speculative  hypothesis  could  have  but 
two  results:  one,  leading  through  an  analysis  of  the  phenomena  of  matter 
to  a  materialistic  and  mechanical  interpretation  of  nature;  another, 

i_Science  and  Culture,  pp.  247-248.   Agnosticism,  Science  and  Christian  Tradition^  p.  209. 


5i8  Philosophy  Pt.  IV 

leading  through  an  analysis  of  consciousness  to  a  resolution  of  knowl- 
edge into  a  series  of  subjective  ideal  relations.  This  seemed  to  be 
the  law  controlling  the  action  of  the  rational  speculative  intellect  in 
the  best  and  clearest  thought  the  world  has  developed;  that  of  Greece. 
Modern  inquiry,  examined  in  relation  to  tliis  law,  seemed  to  follow 
exactly  the  same  rings  and  results  traceable  in  antiquity.  If  this  law 
has  governed  speculative  investigation,  it  cannot  have  escaped  the 
attention  of  competent  students;  nor  has  it. 

"There  are  two  characteristics  of  Modern  Philosophy,"  says  Lewes,^ 
"which  may  here  be  briefly  touched  on.  The  first  is  the  progressive  de- 
velopment of  Science,  which  in  ancient  speculations  occupied  the  sub- 
ordinate rank,  and  which  now  occupies  the  highest.  The  second  is 
the  reproduction  in  Philosophy  of  all  the  questions  which  agitated  the 
Greeks,  which  also  pass  through  a  similar  course  of  development:  not 
only  are  the  questions  similar,  but  their  evolutions  are  so. 

"After  the  Eleatics  had  vexed  the  problems  of  Existence  to  no  purpose, 
there  came  Democritus,  Anaxagoras,  Plato,  and  Aristotle,  who  en- 
deavored to  settle  the  problems  of  the  nature  and  origin  of  human  knowl- 
edge. So,  in  modern  times,  after  Descartes  and  Spinoza,  came  Hobbes, 
Locke,  Leibnitz,  Reid,  and  Kant.  The  ancient  researches  into  the  origin 
of  knowledge  ended  in  the  Skeptics,  the  Stoics,  and  the  New  Academy: 
that  is  to  say,  in  Skepticism,  Common  Sense,  and  Skepticism  again. 
The  modern  researches  ended  in  Berkeley,  Hume,  Reid,  and  Kant: 
That  is,  in  Idealism,  Skepticism,  Common  Sense,  and  Skepticism  again. 
These  inquiries  terminating  thus  fruitlessly,  a  new  and  desperate  spring 
was  made  in  Alexandria:  reason  was  given  up  for  ecstasy;  Philosophy 
merged  itself  in  Religion.  In  Germany  a  similar  spectacle  presents 
itself:  Schelling  identified  Philosophy  with  Religion.  Thus  has 
Philosophy  completed  its  circle,  and  we  are  left  in  this  nineteenth 
century  precisely  at  the  same  point  at  which  we  were  in  the  fifth." 

The  trenchant  pen  of  Huxley  ^  summarizes  the  results  of  more  than 
two  thousand  years  of  the  speculative  labours  of  man.  "Materialism 
and  Idealism;  Theism  and  Atheism;  the  doctrine  of  the  sotd  and  its 
mortality  or  immortality  —  appear  in  the  history  of  philosophy  like  the 
shades  of  Scandinavian  heroes,  eternally  slaying  one  another  and  eternally 
coming  to  life  again  in  a  metaphysical  'Nifelheim.'  It  is  getting  on 
for  twenty-five  centuries,  at  least,  since  mankind  began  seriously  to 

>  History  of  Philosophy,  p.  788. 

*  Science  and  Chrislian  Tradition,  p.  312. 


Bk.  IV  Modern  Philosophy  519 

give  their  minds  to  these  topics.  Generation  after  generation,  philos- 
ophy has  been  doomed  to  roll  the  stone  uphill;  and,  just  as  all  the  world 
swore  it  was  at  the  top,  down  it  has  rolled  to  the  bottom  again.  All 
this  is  written  in  innvmierable  books;  and  he  who  will  toil  through  them 
will  discover  that  the  stone  is  just  where  it  was  when  the  work  began." 

Is  any  other  result  probable?  Reason,  in  ultimate  analysis,  must  be 
the  inclusion  of  a  fact  within  a  fact  of  wider  significance.  It  can  only 
begin  with  the  recognition  of  a  truth,  and  continue  through  the  refer- 
ence of  this  truth  to  another  of  more  general  application.  This  done, 
the  process  must  continue  indefinitely  or  reach  the  inexplicable;  that  is, 
cease  to  be  reason.  This  position  is  unaffected  if  the  deductive,  in 
place  of  the  inductive,  process  is  contemplated.  The  question  then 
resolves  itself  into  one  dealing  with  the  sources  of  the  basis  of  the  de- 
duction. If  this  basis  is  derived  from  experience,  the  method  just 
mentioned  is  that  upon  which  this  basis  itself  must  repose.  If  derived 
from  something  other  than  experience,  its  source  remains  to  be  deter- 
mined; and  when  the  rational  mind  attempts  this,  it  finds  itself,  in  a 
flash,  back  with  Anaximander  at  the  origin  of  thought;  to  drone  once 
more  round  the  rings  already  traced. 

This  it  seems  is  the  condition  of  the  action  of  the  human  reason. 
It  acts  this  way  or  it  acts  not  at  all.  If  the  Reason  arrests  the  process 
at  a  given  point,  it  accepts  an  inexplicable  fact  which  the  sense  perceives. 
If  it  continues  the  process,  it  can  never  reach  an  intelligible  end  within 
the  finite  human  consciousness.  In  the  first  instance,  it  settles  upon 
the  rocks  of  Epicurus;  in  the  second,  it  drifts  about  in  the  consciously 
hopeless  Skepticism  of  Pyrrho.  In  both,  or  in  either,  it  meets  the 
inscrutable;  brings  up  face  to  face  with  the  Sphinx  that  broods  over  human 
existence,  wherever  the  mind  may  turn. 

A  possible  analogy  has  been  mentioned  between  the  history  of  sculp- 
ture and  the  history  of  rational,  cosmic  speculation.  It  was  suggested 
that  that  rare  source  of  beauty  and  inspiration,  the  Hellenic  intellect, 
had  exhausted  the  possibilities  of  the  former;  and  it  may  appear  that 
it  has  exhausted  the  possibilities  of  the  latter  as  well.  As  the  great 
torso  of  Appolonius  in  the  Vatican  throws  its  shadow  over  every  form 
that  fell  from  the  chisel  of  Buonarroti,  the  consistent,  sculpturesque 
minds  of  Anaximander,  Democritus,  Protagoras,  Aristotle,  and  Pyrrho 
throw  their  shadows  over  the  thought  that  was  to  come.  These  men 
loved  pure  Reason  as  a  god;  they  followed  the  light  of  the  gray-eyed 
Athene  that  glowed  within,  as  the  mariner  the  gleam  of  the  spear  of 


520  Philosophy  Pt.  IV 

Athene  Promachos  that  flashed  from  the  Acropolis;  and  the  thought  of 
these  men  carved  the  history  of  the  himian  reason  out  of  chaos.  Thus, 
the  rockbound  coasts  of  Democritus,  and  the  quicksands  of  Prota- 
goras are  all  that  pure  Philosophy  has  discovered.  The  whole  history 
of  philosophy  might  be  presented  as  one  interminable  line  of  rocks  and 
shoals  in  a  sea  of  futile  speculation,  on  which  a  steely  sky  looks  down  in 
bland,  imconscious  irony  on  all  the  efforts  of  the  mind  of  man  to  pene- 
trate bevond. 


CHAPTER  V 


CHRIST 


Section  I — The  Law  of  Substance.    Section  II — The  Law  of  Reason. 
Section  III  —  The  Law  of  God. 


Section  I  —  The  Law  of  Substance 

THE  first  efforts  in  cosmological  speculation  dealt  with  matter 
as  e\ddent  to  sense.  From  Thales  and  Anaximenes  down 
to  the  present,  many  clear  and  able  minds  have  been  absorbed 
in  a  materialistic  interpretation  of  the  phenomenal  world. 
Every  addition  to  knowledge,  from  this  point  of  view,  strengthens  the 
material  and  mechanical  conception  of  the  universe.  For,  it  may  be 
said,  science  is  impossible  without  law,  and  every  -widening  vista  of 
nature,  gained  through  the  media  of  the  experimental  sciences,  but 
reveals  the  subjection  of  phenomena  to  a  never-varying  sequence  of 
mechanical  cause  and  effect. 

When  the  all-pervading  influence  of  law  throughout  the  Cosmos  is  rec- 
ognized, and  man  is  regarded  as  an  infinitesimal  manifestation  thereof, 
his  complete  insignificance  is  evident.  In  this  light  man  becomes  but 
a  more  or  less  conscious  automaton  controlled  by  cosmic  forces  as 
old  and  as  powerful  as  the  material  universe,  which  sweep  him  blindly 
into  and  out  of  his  ephemeral  existence,  as  determined  by  the  action 
and  interaction  of  a  system  of  laws  possessing  neither  consciousness  nor 
volition.  This  is  the  philosophic  attitude  annoimced  and  demonstrated 
ages  ago  by  Democritus,  Epicurus,  and  Lucretius.  Modem  science 
strengthens  this  position. 

Among  the  most  suggestive  contributions  to  knowledge,  in  a  philo- 
sophic sense,  is  that  generalization  of  Professor  Weismann  known  as 
the  "continuity  of  the  germ-plasm."  This  position  and  its  demon- 
stration present  important  evidence  in  support  of  the  materialistic 
and  mechanical  interpretation  of  the  phenomena  of  life.  To  suppose 
that  man  possesses,  individually  or  collectively,  the  sb'ghtest  control 
over  his  own  existence,  physical  or  mental,  may  well  have  seemed  but  a 

521 


52  2  Philosophy  Pt.IV 

curious  illusion  since  the  days  of  Democritus.  When,  however,  man  is 
studied  in  the  light  of  the  theory  of  Continuity,  he  exists  but  as  a  plant- 
like growth  of  somatic  cells  gathered  about  a  rootstock  of  vital  germs, 
from  which  the  somatic  cells  fall  away  as  the  individual  dissolves. 
This  position  understood,  it  is  obvious  that  no  efforts  of  the  individual, 
singly  or  combined,  can  affect  the  nature  of  the  germ-cells  as  handed 
down  from  one  generation  to  another.  Comparing  the  germ-plasm 
to  a  long  creeping  rootstock  from  which  individual  plants  arise  at 
intervals,  Professor  Weismann^  says: 

"Hence  it  follows  that  the  transmission  of  acquired  characters  is 
an  impossibility,  for  if  the  germ-plasm  is  not  formed  anew  in  each 
individual  but  is  derived  from  that  which  preceded  it,  its  structure, 
and  above  all  its  molecular  constitution,  cannot  depend  upon  the  in- 
dividual in  which  it  happens  to  occur,  but  such  an  individual  only  forms, 
as  it  were,  the  nutritive  soil  at  the  expense  of  which  the  germ-plasm 
grows,  while  the  latter  possessed  its  characteristic  structure  from  the 
beginning,  viz.,  before  the  commencement  of  growth." 

In  a  philosophic  sense,  this  theory  of  Continuity  is  exceptionally 
interesting;  for,  as  its  significance  is  grasped  it  becomes  evident  that 
the  external  forces  of  environment  and  heredity  are  not  important 
influences  in  the  life  of  the  individual,  but  the  sole  and  all-controlling 
influences.  If  inherited  qualities  are  entirely  due  to  a  naturally  selective 
cosmic  process,  in  which  the  acquirements  of  the  individual  play  no 
part;  and  if  all  mental  or  physical  assimilations  are  the  transitory  ac- 
cidents of  environment  —  and  there  seems  justification  to  many  ob- 
servers for  accepting  both  these  positions  —  there  seems  no  place,  in 
any  independent  sense,  for  that  much  discussed  entity  or  non-entity, 
the  human  ego.  The  individual  of  the  human  species,  as  that  of  any 
other  species,  becomes,  as  Professor  Weismann  says,  a  plant-like  growth 
or  "the  nutritive  soil  at  the  expense  of  which  the  germ-plasm  grows." 
There  are  few  scientific  discoveries  so  little  flattering  to  the  "  heaven 
descended  heir  of  all  the  ages  "  as  this  important  position  of  Continuity. 
In  a  philosophic  sense  it  practically  obliterates  him  and  all  his  works. 

As  far  back  as  the  days  of  Democritus,  there  has  been  good  reason 
to  regard  man  as  a  fortuitous  coalescence  of  the  elements  of  matter 
in  a  state  of  flux.  When,  however,  he  is  placed  beneath  the  high-powered 
microscope  of  modern  science,  and  studied  upon  the  comparative  an- 
atomical dissecting  table  or  in  the  biological  laboratory,  it  seems  im- 

•  Significance  of  Sexual  Reproduction,  Essays  on  Heredity,  Vol.  i.,  p.  373. 


Bk.  IV  Christ  523 

possible  to  regard  him  in  any  other  light.  From  this  point  of  view, 
his  powers  of  independent  volition,  moral  intuitions,  intellectual  activi- 
ties, and  spiritual  aspirations  become  automatic  hallucinations  trace- 
able to  molecular  flux. 

The  problems,  however,  of  the  freedom  of  the  human  will,  and  moral 
responsibility,  meet  the  inquirer  on  every  side,  at  every  step;  in  almost 
every  phase  of  scientific  investigation.  If  the  evolutionary  and  bio- 
logical sciences,  together  with  the  earlier  forms  of  Atomism,  are  ignored, 
and  matter  resolved  into  electric  force-points,  or  units  of  positive  and 
negative  electricity,  the  question  is  but  shifted  into  other  fields. 

An  interesting  parallel  has  been  drawn  between  Kant,  as  a  philos- 
opher, and  Copernicus,  as  an  astronomer.  The  latter  demonstrated 
that  the  apparent  movement  of  many  of  the  heavenly  bodies  could 
be  explained  by  the  motion  of  the  earth  itself;  and  Kant  shows  how 
many  mental  phenomena  may  be  referred,  not  to  external  causes,  but 
to  the  laws  governing  the  working  of  the  individual  human  mind.  In 
developing  this  analogy  it  is  obvious  that  the  study  of  psychic  phenom- 
ena may  be  removed  from  the  field  of  external  causes,  and  applied 
directly  to  the  contemplation  of  the  mechanics  and  chemistry  of  the 
brain  itself.  The  researches  of  the  physiological  psychologists  are 
uniform  in  their  conclusions  in  this  connexion.  The  works  of  Ferrier, 
Ribot,  Wunt,  Horsley,  Spencer,  Huxley,  Schiff,  Hitzig,  Luys,  Goltz, 
Clerk-Maxwell,  Schafer,  Bain,  Clausius,  and  a  host  of  other  inquirers 
go  far  to  show  that  from  whatever  point  of  view  the  molecular  con- 
stitution of  the  brain  is  observed,  its  physical  condition  and  the  accom- 
panying sequences  of  ideas  and  sensation  appear  as  much  under  the 
influence  of  mechanical  law  as  any  class  of  phenomena  coming  within 
the  range  of  the  natural  sciences.  Says  Huxley,  ^  after  an  interesting 
review  of  the  subject:  "If  these  positions  are  well  based,  it  follows 
that  our  mental  conditions  are  simply  the  symbols  in  consciousness 
of  the  changes  which  take  place  automatically  in  the  organism;  and 
that,  to  take  an  extreme  illustration,  the  feeling  we  call  volition  is  not 
the  cause  of  a  voluntary  act,  but  the  symbol  of  that  state  of  the  brain 
which  is  the  immediate  cause  of  that  act." 

Thus,  whether  the  subject  is  approached  externally,  from  the  at- 
titude of  the  evolutionist  or  biologist,  in  the  study  of  the  influences 
of  heredity  and  selection:  or  internally,  in  the  study  of  the  chemical 
and  molecular  constitution  of  the  brain,  from  the  theory  of  the  co-rela- 

»  Animal  Automatism.    Science  and  Culture,  p.  246. 


524  Philosophy  Pt.  IV 

tion  and  conservation  of  energy;  from  the  position,  in  fact,  of  any  or  all 
of  the  inductive,  natural  sciences,  a  stream  of  mechanical  cause  and  me- 
chanical efifect  appears,  through  which  the  human  ego  is  swept  very  much 
as  a  fallen  leaf  through  the  course  of  a  mountain  torrent. 

And  as  the  view  is  extended,  this  helplessness  and  insignificance 
of  man  but  comes  into  increasing  prominence.  The  vast  unconscious 
stream  of  matter,  flowing  through  all  the  worlds  within  range  of  the 
perceptions,  sweeping  "all  things"  from  non-being  into  being,  and  back 
into  the  night,  seems  to  present  but  one  approximation  to  Reality  — 
but  one  condition  as  the  resiilt  of  the  "Law  of  Substance";  affecting 
the  systems,  and  galaxies  of  systems,  of  stellar  space  as  indifferently 
as  the  puny  labours,  the  "empires,"  and  the  "progress"  of  man.  Change 
and  dissolution,  it  seems,  are  the  only  Realities  which  the  Law  of  Sub- 
stance has  to  present. 

"Natural  knowledge,"  says  Huxley,^  "tends  more  and  more  to  the 
conclusion  that  'all  the  choir  of  heaven  and  furniture  of  the  earth'  are 
the  transitory  forms  of  parcels  of  cosmic  substance  wending  along  the 
road  of  evolution,  from  nebulous  potentiality,  through  endless  growth 
of  sun,  and  planet,  and  satellite;  through  all  varieties  of  matter;  through 
infinite  diversities  of  life  and  thought;  possibly,  through  modes  of  being 
of  which  we  neither  have  a  conception,  nor  are  competent  to  form  any, 
back  to  the  indefinable  latency  from  which  they  arose.  Thus  the  most 
obvious  attribute  of  the  cosmos  is  its  impermanence."  Man  and  his 
works  grow  strangely  ephemeral  when  studied  in  the  light  of  the  Law 
of  Substance;  neither  man  himself  nor  his  systems,  neither  the  builders 
nor  the  structures,  seem  endowed  with  any  permanent  significance: 

"Seest  thou  these  great  buildings?"  says  Christ ;2  "there  shall  not 
be  left  here  one  stone  upon  another,  which  shall  not  be  thrown  down." 

The  light  of  pure  science,  when  turned  upon  man,  from  whatever 
position,  reveals  but  blindness,  helplessness,  and  insignificance.  "I 
know  no  study,"  says  Huxley,^  "which  is  so  unutterably  saddening 
as  that  of  the  evolution  of  humanity  as  it  is  set  forth  in  the  annals  of 
history,"  and  science  seems  to  point  to  a  future  worthy  of  the  past. 
Man  bears  the  mask  of  death  upon  his  brow,  the  germ  of  his  lowly 
origin  in  his  body;  and  when  progress  ceases,  as  cease  it  one  day  must 
from  forces  generated  from  within,  as  well  as  from  without  "regressive 


•  Evolution  and  Ethics,  p.  50. 

«  Mark  XIII:  2. 

'  Science  and  Christian  Tradition,  p.  256. 


Bk.  IV  Christ  525 

is  as  practicable  as  progressive  metamorphosis'.'  *  When  man  reaches 
the  crown  of  his  evolution,  he  will  apparently  begin  the  reversal  of  the 
processes  through  which  he  has  proceeded  in  the  past;  and  the  principle 
of  the  Continuity  of  the  vital  substance  from  which  his  life  arises  seems 
to  show  what  the  reversal  of  those  processes  means.  In  the  literal, 
scientific  sense  of  the  words,  as  Christ^  says,  "many  shall  be  last  that 
are  first;  and  first  that  are  last." 

The  Law  of  Substance  points  with  as  certain  a  finger  to  the  future 
of  humanity  as  that  with  which  it  points  to  its  past.  In  any  event, 
whatever  future  awaits  man  himself,  a  lifeless  mass  of  inert  matter, 
revolving  aimlessly  through  space  until  it  itself  dissolves,  is  the  only 
future  science  has  to  predict  of  the  earth  upon  which  he  exists. 

Thus,  studied  in  the  light  of  the  Law  of  Substance,  man  seems  to 
possess  no  significance  of  any  kind.  He  represents  nothing  but  fleeting 
accumulations  of  moving  matter,  which  grow  dimly  conscious  of  them- 
selves for  a  moment  and  then  fade  into  infinite  nescience.  Neither 
he  nor  anything  else  possesses  the  slightest  comprehension  of  anything 
in  a  universe  of  plant-like  matter  in  unconscious  motion.  He  is  as 
much  a  nonentity  as  the  transitory  shape  of  a  wave  which  forms  to 
break  upon  a  rock.  He  possesses  no  more  significance  than  the  flux 
of  a  chemical  compound  or  the  reaction  of  an  acid.  The  Law  of  Sub- 
stance leads  straight  to  an  unqualified  materialistic  atheism  and  nothing 
else. 

From  this  point  of  view  man  is  obviously  of  no  interest,  other  than 
as  an  atomic  unit  in  society.  Ethics  is  the  science  of  society,  so  far 
as  such  a  science  may  be  said  to  exist.  What  then  are  the  ethics  of 
the  Law  of  Substance?  The  latest  and  most  authoritative  exposition 
of  this  conception  of  nature  is  found  in  Professor  Haeckel's  interesting 
Riddle  of  the  Universe: 

"Man,"  says  Haeckel,^  "belongs  to  the  social  vertebrates  and  has 
consequently,  as  all  other  social  animals,  two  different  duties:  one  to 
himself,  and  another  to  the  society  to  which  he  belongs.  The  first 
is  dictated  by  self-love,  or  egoism;  the  second  by  love  of  others,  or 
altruism.  .  .  .  The  recognition  of  the  equal  value  of  these  two 
impulses  —  love  of  self  and  love  of  others  —  is  the  most  important 
fundamental  principle  of  our  morality.     The  highest  goal  of  all  rational 


1  Evolution  and  Ethics,  p.  igg. 
«  Matthew  XIX:  30. 
•  Die  Welimhsel,  p.  404. 


526  Philosophy  Pt.  IV 

ethics  is  thus  very  simple:  the  establishment  of  the  natural  equality  of 
egoism  and  altruism,  of  self-love  and  the  love  of  one's  neighbour.  The 
Golden  Rule  says:  'Do  unto  others  as  you  would  that  they  should  do 
unto  you.'  From  this  highest  of  Christian  precepts  it  follows  of  it- 
self that  we  have  duties  toward  ourselves  as  sacred  as  those  toward  our 
fellows.  .  .  .  From  the  recognition  of  our  fundamental  moral 
principle  follows  its  highest  precept,  that  command  called  the  Golden 
Rule  of  ethics,  or  briefly,  the  Golden  Rule.  Christ  has  repeated  in 
the  single  phrase:  'Thou  shalt  love  thy  neighbour  as  thyself.'  Mark 
rightly  adds:  'There  is  no  greater  commandment  than  this,'  and 
Matthew  says:  'In  these  two  commandments  is  the  whole  law  and 
the  prophets.'  In  this  weightiest  and  highest  commandment  is  our 
monistic  ethics  in  perfect  accord  with  Christianity." 

Haeckel  then  traces  the  origin  of  this  principle  to  the  period  at  which 
men  first  began  to  think,  and  it  thus  seems  that  the  ethics  of  the  Law 
of  Substance,  from  Confucius  to  Haeckel,  may  be  formulated,  as  formu- 
lated by  Haeckel,  in  the  words  of  Jesus  of  Nazareth  :i 

"All  things  therefore  whatsoever  ye  would  that  Men  should  do  unto 
you,  even  so  do  ye  also  unto  them:  for  this  is  the  law  and  the  prophets." 

Section  II  —  The  Law  of  Reason 

An  analysis  of  the  history  of  philosophic  inquiry  seems  to  show  that 
every  interpretation  of  nature,  involving  matter  as  a  controlling  element, 
sooner  or  later  leads  up  to  a  fully  developed  atheistic  materialism.  It 
may  also  show  that  every  exhaustive  system  of  inquiry,  turning  to  an 
analysis  of  the  reason,  sooner  or  latter  culminates  in  the  quicksands  of 
an  idealistic  Skepticism.  When  the  rational  perfection  of  both  these 
systems  is  understood,  it  may  seem  that  rational  thought,  which  has 
not  yet  reached  one  or  the  other,  is  simply  thought  in  a  process  of  evolu- 
tion which  has  yet  to  reach  its  final  development;  the  development  of 
the  thought  of  Plato  and  Aristotle  led  to  nothing  else.  The  mechanical 
materialism  of  Democritus  has  never  been  rationally  answered,  and 
still  dominates  some  of  the  ablest  minds  of  modern  times.  In  the  same 
way,  no  reply  has  ever  been  made  to  the  skeptical  modes  of  the  sus- 
pension of  judgment.  It  may  be  said,  within  their  fields,  that  pure 
Atomism  and  pure  Skepticism  are  the  only  rational  positions  formulated 
by  the  human  mind.  Yet  the  human  mind  has  refused  to  accept  them 
as  final,  with  the  result  that  it  has  done  nothing  but  drift  round  in 

»  Matthew  VII:  12. 


Bk.  IV  Christ  527 

rings;  periodically  re-discovering  these  two  positions  after  re-develop- 
ing processes  of  thought,  which  had  been  fully  exhausted  hundreds  or 
thousands  of  years  before. 

A  scientific  Skepticism,  based  upon  the  subjectivity  of  knowledge, 
leads  to  the  tolerance  of  every  error;  for  the  reason,  that  not  only 
can  no  truth  exist  independently  of  a  series  of  relations;  but  even 
supposing  its  existence,  its  comprehension  would  necessarily  be  resolv- 
able into  such  a  series.  It  is  impossible  to  state  this  position,  together 
with  a  complete  summary  of  all  the  modes  of  the  suspension  of  judgment 
formulated  by  the  skeptical  intellect,  more  clearly  and  finally  than  in 
the  words  of  Jesus ^  of  Nazareth: 

"Judge  not." 

This  train  of  thought,  however,  carried  to  its  logical  conclusion  pro- 
duces an  inarticulate  quietism,  conscious  of  nothing  but  its  own  ig- 
norance. Pure  Skepticism  is  no  more  flattering  to  man  than  pure 
Atomism.  Atomism  reduces  him  to  a  fortuitous  chemical  compound 
in  a  state  of  flux;  Skepticism  to  a  kaleidoscopic  series  of  illusions  — 
likewise  in  a  state  of  flux.  From  either  point  of  view,  the  action  of  his 
mind  possesses  no  comprehensive  potentiality,  any  more  than  that  of  a 
magpie  or  a  phonograph:  his  tongue  but  rattles  over  the  jingles  scribbled 
by  instinct  or  the  accidents  of  experience  on  the  phosphorescent  records 
of  his  brain. 

This  perfect  skeptical  quietism,  however,  will  not  be  able  to  hold 
the  more  powerful  intellects  which  understand  it;  the  result  being  that 
they  will  attempt  an  analysis  of  experience,  in  hopes  at  least  of  reducing 
it  to  an  orderly  conception  of  relations.  This  is  the  attitude  from  which 
is  derived  the  Positive  System  of  Comte  and  the  Synthetic  Philosophy  of 
Mr.  Spencer.    In  this  way  philosophies  of  experience  are  evolved. 

An  analysis  of  experience  attempts  no  solution  of  ultra-mundane 
problems;  human  relations  alone  are  considered.  But  human  relations 
once  more  present  ethics  as  the  chief  object  of  inquiry.  In  other  words, 
in  the  light  of  the  Law  of  Reason,  man  seems  to  possess  no  significance 
except  as  a  member  of  human  society.  What  then  are  the  ethics  of 
the  Law  of  Reason? 

Perhaps  the  most  authoritative  formulation  of  the  relativity  of  human 
knowledge,  together  with  a  philosophic  synthesis  of  the  experimental 
sciences,  may  be  found  in  the  works  of  Mr.  Spencer;  these  therefor 
may  present  the  most  recent  and  important  statement  of  the  ethics 

«  Matthew  VII:  i. 


528  Philosophy  Pt.  IV 

of  the  Law  of  Reason.  In  the  Data  of  Ethics,^  Mr.  Spencer,  expresses 
his  beUef  in  the  uhimate  rational  union  of  what  are  called  the  egoistic 
and  altruistic  conceptions  of  ethical  relations.  "For,"  as  he  says, 
"that  which  the  best  human  nature  is  capable  of  is  within  the  reach 
of  human  nature  at  large."  He  continues:  "From  the  ten  thousand 
priests  of  the  religion  of  love,  who  are  silent  when  the  nation  is 
moved  by  the  religion  of  hate,  will  come  no  sign  of  assent;  nor 
from  their  bishops  who,  far  from  urging  the  extreme  precept  of  the 
master  they  pretend  to  follow,  to  turn  the  other  cheek  when  one  is 
smitten,  vote  for  acting  on  the  principle  —  strike  lest  ye  be  struck. 
Nor  will  any  approval  be  felt  by  legislators  who,  after  praying  to  be^for- 
given  their  trespasses  as  they  forgive  the  trespasses  of  others,  forthwith 
decide  to  attack  those  who  have  not  trespassed  against  them;  and  who  af- 
ter a  Queen's  Speech  has  invoked  '  the  blessing  of  Almighty  God'  on  their 
councils,  immediately  provide  means  for  committing  political  burglary. 

"But  though  men  who  profess  Christianity  and  practise  Paganism 
can  feel  no  sympathy  with  such  a  view,  there  are  some  classed  as  an- 
tagonists to  the  current  creed,  who  may  not  think  it  absurd  to  believe 
that  a  rationalized  version  of  its  ethical  principles  will  eventually  be 
acted  upon." 

The  name  of  Huxley  is  not  associated  with  any  formal  system  of 
thought;  yet  few  men  of  modern  times  have  given  greater  powers  to 
the  dissemination  of  the  light  of  pure  Reason.     He  says:^ 

"Again,  all  that  is  best  in  the  ethics  of  the  modern  world,  in  so  far  as 
it  has  not  grown  out  of  Greek  thought,  or  Barbarian  manhood,  is  the 
direct  development  of  the  ethics  of  old  Israel.  There  is  no  code  of 
legislation,  ancient  or  modern,  at  once  so  just  and  so  merciful,  so  tender 
to  the  weak  and  poor,  as  the  Jewish  law;  and,  if  the  Gospels  are  to  be 
trusted,  Jesus  of  Nazareth  himself  declared  that  he  taught  nothing  but 
that  which  lay  implicitly,  or  explicitly,  in  the  religious  and  ethical  system 
of  his  people." 

It  would  seem,  therefore,  that  the  Ethics  of  the  Law  of  Reason,  as 
voiced  by  Spencer  and  Huxley,  are  identical  with  the  ethics  of  the  Law 
of  Substance  as  voiced  by  Haeckel ;  and  that  the  Ethics  of  both  Substance 
and  Reason  are  identical  with  the  Ethics  of  Jesus  of  Nazareth ;  and  might 
be  summarized  in  the  passage  cited  from  Matthew  which  He  said  con- 
tained "the  law  and  the  prophets": 

i"{5  97-98,  pp.  256-257. 

•  Science  and  Christian  Tradition,  p.  315- 


Bk.  IV  Christ  529 

"All  things  therefore  whatsoever  ye  would  that  men  should  do  unto 
you,  ever  so  do  ye  also  unto  them." 

Section  III  —  The  Law  of  God 

In  a  study  of  the  sources  of  religious  thought  these  phenomena  were 
accepted  without  question,  as  the  scientist  accepts  the  phenomena  of 
the  material  world.  This  attitude  may  appear  superficial.  The  de- 
velopment of  modern  scientific  method  may  seem  to  demonstrate  the 
negligible  nature  of  the  phenomena  of  religion.  The  interesting  work 
of  Professor  Haeckel  presents  strong  support  for  this  view.  It  may, 
therefore,  be  of  interest  to  inquire  whether  the  discussion  of  religion  is 
not  a  mere  waste  of  time;  and  whether  thought,  based  upon  the  existence 
of  God,  is  not  based  upon  nothing  at  all. 

In  an  essay  upon  Animal  Automatism,  Professor  Huxley  develops 
the  philosophic  significance  of  the  physical  constitution  of  the  animal 
body  and  brain,  and  applies  it  with  its  corollaries  to  the  human  being. 
The  question  arises  then,  whether,  in  the  opinion  of  such  a  distinguished 
scientist,  this  mechanical  hypothesis  of  necessity  eliminates  all  others'; 
rendering  materialism,  fatalism  or  atheism  the  only  tenable  attitude 
with  reference  to  man  and  nature.    Huxley ^  says: 

"As  I  have  endeavoured  to  explain  on  other  occasions,  I  really  have 
no  claim  to  rank  myself  among  fatalistic,  materialistic,  or  atheistic 
philosophers.  Not  among  fatalists,  for  I  take  the  conception  of  necessity 
to  have  a  logical,  and  not  a  physical  foundation;  not  among  material- 
ists, for  I  am  utterly  incapable  of  conceiving  the  existence  of  matter 
if  there  is  no  mind  in  which  to  picture  that  existence;  not  among  atheists 
for  the  problem  of  the  ultimate  cause  of  existence  is  one  which  seems 
to  me  to  be  hopelessly  out  of  reach  of  my  poor  powers.  Of  all 
the  senseless  babble  I  have  ever  had  occasion  to  read,  the  dem- 
onstrations of  those  philosophers  who  undertake  to  tell  us  all  about 
the  nature  of  God  would  be  the  worst,  if  they  were  not  surpassed 
by  the  still  greater  absurdities  of  the  philosophers  who  try  to  prove 
that  there  is  no  God." 

In  the  opinion  of  one  of  the  ablest  scientists  and  clearest  thinkers  of 
modern  times,  it  seems  that  neither  the  "Law  of  Substance"  nor  the 
"Law  of  Reason"  has,  in  the  slightest  particular,  demonstrated  the  non- 
existence of  God  and  that  all  attempts  at  such  demonstration  are 
worse  than  "senseless  babble." 

'  Science  and  Culture,  pp.  247-248. 


530  Philosophy  Pt.  IV 

"But,"  he  says  again,^  "if  it  is  certain  that  we  can  have  no  knowledge 
of  the  nature  of  either  matter  or  spirit,  and  that  the  notion  of  necessity 
is  something  illegitimately  thrust  into  the  perfectly  legitimate  concep- 
tion of  law,  the  materialistic  position  that  there  is  nothing  in  the  world 
but  matter,  force,  and  necessity,  is  as  utterly  devoid  of  justification  as 
the  most  baseless  of  theological  dogmas." 

Sense  and  Reason!  Sense  and  Reason!  Poor  humanity  possesses  no 
means  other  than  these  of  deriving  intelligible  impressions  from  the 
objective  world.  These  are  its  only  eyes  —  and  these  are  glazed  and 
sightless.  The  soul,  to  borrow  an  analogy  from  Socrates,  is  locked  in 
a  dungeon;  the  darkness  is  broken  by  feeble  light  derived  through  two 
narrow  openings.  One  looks  out  upon  a  blank  wall;  the  other  upon  a 
blank  fog.  Atomism  and  Skepticism  are  all  it  can  see.  Other  than 
these,  it  is  conscious  of  nothing  but  a  black  night  of  nescience:  all  that 
pure  intelligence  has  ever  produced. 

Strange  to  say,  however,  the  intelligence,  after  developing  these 
positions,  seems  to  reach  out  in  spite  of  itself  to  something  transcending 
its  own  formless  chaos.  Pure  atheistic  materialism  is  indebted  to  no 
one  more  than  to  Democritus,  yet  even  this  rarely  rational  intelligence 
cannot  resist  the  temptation  of  infusing  a  few  wraithlike  divinities 
into  his  atomic  Cosmos,  While  his  mind  moves  with  resistless  pre- 
cision, when  limited  to  the  physical,  it  commands  but  slight  respect  in 
its  theological  flights.  The  fact,  nevertheless,  remains  that  the  first 
of  scientific  atheists  and  materialists  recognized  the  "gods"  and  even 
developed  a  strange  and  mysterious  theogony  of  his  own. 2 

Epicurus,  the  next  great  philosophic  ''atheist,"  displays  the  same 
inconsequent  phenomenon:  that  of  a  philosopher  who  regards  sense  as 
the  only  criterion  of  truth;  yet  who  talks  about  "the  gods."  Laertius^ 
says,  he  was  a  remarkably  pious  man;  that  he  even  wrote  a  work  on 
piety  and  a  treatise  on  the  Gods.  Epicurus,  while  usually  regarded  as 
the  arch  prophet  of  atheism,  seems  in  reality  to  have  had  no  slight 
theological  tendencies,  and  even  follows  in  the  path  of  Democritus  in 
establishing  a  vague  and  intangible  theogony.'*  It  must  be  admitted, 
however,  that  the  theologizing  of  Democritus  and  Epicurus  is  not 
inspiring.     The  theologizing  materialist  is  little  more  successful  outside 

'  Lay  Sermons  and  Addresses,  pp.  124-125. 

'  For  a  thorough  review  of  the  subject  and  all  sources  Cf.  Zeller,  Pre-SocraticPkilosopky.Xol.  II.,  p.  288 
et  seq. 

•  Epicurus,  X.,  s  and  17. 

♦  Cf.  Zeller,  Sttncs  and  Epicureans,  p.  438,  where  all  sources  may  be  found. 


Bk.  IV  Christ  531 

his  field  than  the  philosophizing  theologian.  Zeller^  compares  the  theog- 
ony  of  Epicurus  to  a  society  of  Epicurean  philosophers.  The  learned 
Doctor  Cudworth  does  not  hesitate,  and,  although  on  one  page^  he 
cites  a  passage  from  Epicurus,  from  which  he  deduces  that  that  philos- 
opher acknowledged  "an  animalish  and  conscious  or  perceptive  nature," 
"besides  senseless  matter";  yet,  on  another,  he  speaks  of  the  Gods  of 
Epicurus  in  by  no  means  respectful  terms.  He  calls  ^  them  a  "multi- 
farious rabble  and  democracy  of  Gods,"  and  again'*  refers  to  them  as 
"those  romantic  monogrammous  Gods  of  Epicurus,"  which  "could 
have  been  nothing  else  but  a  certain  kind  of  aerial  and  spectrous  men, 
living  by  themselves,  nobody  knows  where."  The  dispassionate  in- 
quirer may  well  find  reason  for  sympathy  with  the  illustrious  author  of 
the  Intellectual  System  of  the  Universe  in  the  supercilious  treatment 
accorded  the  "romantic"  and  "monogrammous"  Gods  of  Epicurus, 
who  '  'live  by  themselves,  nobody  knows  where."  In  theological  matters 
it  seems  but  natural  to  desire  to  have  one's  divinities  under  one's  eye, 
so  to  speak,  as  the  learned  Doctor  evidently  had  his  own. 

Strange  to  say  again,  even  the  majestic  Lucretius^  condescends  to  a 
far-off  and  preoccupied  theogony.  "Who  pass  their  lives  serene  in 
calm  repose,"  in  another  remote  neighbourhood,  the  situation  of  which 
he  fails  to  determine. 

The  real  philosopher  turns  with  a  sense  of  relief  from  the  teleological 
speculations  of  such  dogmatic  theologians  as  Democritus,  Epicurus, 
and  Lucretius,  to  the  really  consistent  atheistic  thought  of  Diderot, 
Lamettrie,  Holbach,  and  Haeckel. 

The  action  of  the  rational  modern  mind  on  coming  in  contact  with 
the  blank  of  philosophy  is  among  the  interesting  things  in  thought. 
Atomism  and  Skepticism  are  as  old  as  thought  itself,  and  philosophy 
has  produced  nothing  else.  Atomism  and  Skepticism,  however,  possess 
but  a  logical  significance  for  many  of  the  best  minds  understanding  them ; 
and  these,  consequently,  as  soon  as  they  have  developed  one  or  the 
other,  immediately  seek  something  else. 

If  Atomism  is  not  wholly  satisfactory,  the  philosophic  inquirer  may 
inject  a  vital  principle  into  his  universe;  he  will  then  be  in  possession  of  a 
Cosmos  formed  of  matter  and  life.    This  presents  a  dualistic  hypothesis. 

'  Stoics  and  Epicureans,  p.  442. 

'  Intellectual  System,  Vol.  i.,  p.  305. 

•  Ibid.,  p.  103. 

•  Ibid.,  p.  105. 

•  Dc  Rerum  Naiura,  II.,  log^ 


532  Philosophy  Pt.  IV 

Some  are  satisfied  with  this  position  and  go  no  farther.  Others  fuse  the 
material  and  vital  elements,  and  so  form  a  monistic  hypothesis.  The 
resulting  universe  will  then  be  composed  of  an  all-pervading,  vitalized 
substance:  the  position  of  the  old  lonians.  This  is  also  the  modern 
scientific  Monism,  so  ably  advanced  by  Professor  Haeckel.  If  this 
position  does  not  present  all  that's  desired,  as  a  cosmological  theory,  this 
substance  may  be  called  God:  which  offers  some  gratification  to  certain 
minds.  This  is  the  Pantheism  of  Spinoza;  in  reality  it  but  gives  another 
name  to  the  [xtYtJ'-'^  of  the  Ionian  thinkers.  The  Divinity  is  invited 
in  at  one  door  of  the  Cosmos,  so  to  speak,  and  bidden  farewell  at  another, 
as  Haeckel  shows. 

If  none  of  these  positions  seems  sufficiently  inspiring,  modern  rational 
thought  has  but  one  resource:  it  must  turn  to  an  analysis  of  experience 
as  its  only  refuge.  Victor  Cousin,  after  exhausting  earlier  systems, 
attempts  to  formulate  these  in  a  system  combining  their  best  elements; 
various  forms  of  Eclecticism  will  be  the  result.  If  any  of  these  satisfy 
the  intelligence,  inquiry  ceases.  If  not,  Auguste  Comte  presents  another 
method,  the  Positive,  consisting  in  the  formulation  of  the  sciences  as  a 
school  of  thought.  Strange  to  say,  the  mysterious  force  of  religion 
is  here  found  again  as  in  the  thought  of  those  "  atheists,"  Democritus 
and  Epicurus.  In  place  of  the  worship  of  the  Gods,  however, 
Comte  suggests  the  worship  of  humanity;  though  why  any  one 
who  declines  to  worship  the  Divinity  should  worship  anything  is 
not  made  clearer  than  in  the  theology  of  Epicurus  or  Lucretius. 
This  ''anthropolatry"  of  Comteism  is  among  the  strangely  distorted 
evidences  of  what  might  be  called  a  theistic  instinct  in  man.  Huxley, 
while  recognizing^  that  the  service  of  his  fellow  man  is  not  only  an 
intelligible,  but  a  laudable  resolution,  and,  in  the  proper  sense  of  the 
word,  a  religion,  adds  with  reference  to  the  Comtian  religion: 
"But  when  the  Comtist  asks  me  to  worship  'Humanity'  —  that  is 
to  say,  to  adore  the  generalised  conception  of  men  as  they  have  ever 
been  and  probably  ever  will  be  —  I  must  reply  that  I  could  just  as 
soon  bow  down  and  worship  the  generalised  conception  of  a  'wilderness 
of  apes.' " 

Another  form  of  intelligence,  of  which  Huxley  is  the  type,  abandons 
any  attempt  to  reach  an  ultimate  solution  of  the  problems  of  existence; 
thus,  he  invents  the  "Agnostic"  position,  which  shelters  many  a  clear 
and  fearless  intellect  together  with  his  own. 

i  JcLnce  and  Cluistian  Tradition.  Asnosticism,  p.  255. 


Bk.  IV  Christ  533 

Tyndall^  says:  ''The  animal  world  is,  so  to  say,  a  distillation  through 
the  vegetable  world  from  inorganic  nature.  From  this  point  of  view 
all  three  worlds  constitute  a  unity,  in  which  I  picture  life  as  immanent 
everywhere."  This  is  pure  hylozoism,  as  recognized  by  Haeckel. 
Tyndall,  however,  continues:  "Nor  am  I  anxious  to  shut  out  the  idea 
that  the  life  here  spoken  of  may  be  but  a  subordinate  part  and  function 
of  a  Higher  Life,  as  the  living,  moving  blood  is  subordinate  to  the  Uving 
man.  I  resist  no  such  idea  as  long  as  it  is  not  dogmatically  imposed. 
Left  for  the  human  mind  freely  to  operate  upon,  the  idea  has  ethical 
vitality;  but  stiffened  into  a  dogma,  the  inner  force  disappears,  and  the 
outward  yoke  of  a  usurping  hierarchy  takes  its  place." 

Mr.  Spencer's  attitude  seems  to  be  purely  mechanical  and  anthropo- 
logical. He  says  in  First  Principles^  in  a  suggestive  passage  with 
reference  to  the  controversy  between  science  and  religion:  "An  un- 
biased consideration  of  its  general  aspects  forces  us  to  conclude  that 
religion,  everywhere  present  as  a  weft  running  through  the  warp  of 
human  history,  expresses  some  eternal  fact;  while  it  is  almost  a  truism 
to  say  of  science  that  it  is  an  organized  mass  of  facts,  ever  growing  and 
ever  being  more  completely  purified  from  errors,  and  if  both  have  bases 
in  the  reality  of  things,  then  between  them  there  must  be  a  funda- 
mental harmony.  It  is  an  incredible  hj'pothesis  that  there  are  two 
orders  of  truth,  in  absolute  and  everlasting  opposition.  Only  in  some 
Manichean  theory,  which  amongst  ourselves  no  one  dares  openly  avow, 
however  much  his  beliefs  may  be  tainted  by  it,  is  such  a  supposition 
even  conceiA^able.  That  religion  is  di\ine  and  science  diabolical 
is  a  proposition  which,  though  implied  in  many  a  clerical  decla- 
mation, not  the  most  vehement  fanatic  can  bring  himself  distinctly  to 
assert. 

"Each  side,  therefore,  has  to  recognize  the  claims  of  the  other  as 
standing  for  truths  that  are  not  to  be  ignored.  He  who  contemplates 
the  universe  from  the  religious  point  of  view  must  learn  to  see  that  this 
which  we  call  science  is  one  constituent  of  the  great  whole;  and  as  such 
ought  to  be  regarded  with  a  sentiment  like  that  which  the  remainder 
excites.  While  he  who  contemplates  the  universe  from  the  scientific 
point  of  view  must  learn  to  see  that  this  which  we  call  religion  is  similarly 
a  constituent  of  the  great  whole ;  and,  being  such,  must  be  treated  as  a 
subject  of  science  with  no  more  prejudice  than  any  other  reality.    It 


'  Fragments  of  Science,  Vol.  11.,  p.  245. 

t  if,   n    Tft 


'  i  6.  p.  I& 


534  Philosophy  Pt.  IV 

behooves  each  party  to  strive  to  understand  the  other,  with  the  con- 
viction that  the  other  has  something  worthy  to  be  understood;  and  with 
the  conviction  that  when  mutually  recognized  this  something  will  be  the 
basis  of  a  complete  reconciliation." 

In  the  Principles  of  Sociology,  after  an  interesting  review  of  the  closely 
allied  nature  of  the  various  phenomena  of  religion,  Mr.  Spencer ^  says: 
"We  get  from  this  kinship  of  beliefs  among  races  remote  in  time,  space, 
and  culture,  strong  warrant  for  the  inference  that  ghost-propitiation 
is  the  origin  of  all  religions."  The  "eternal  fact,"  therefore,  which  Mr. 
Spencer  regards  as  underlying  the  ever  present  phenomena  of  religion; 
seems  to  be  "ghost-propitiation."  Mr.  Spencer  regrets,  however,  that 
this  position  does  not  appeal  to  a  certain  type  of  intelligence.  He  says:^ 
"It  is  strange  how  impervious  to  evidence  the  mind  becomes  when 
once  prepossessed.  One  would  have  thought  that  such  an  accumulation 
of  proofs,  congruous  with  the  proofs  yielded  by  multitudinous  other 
societies,  would  have  convinced  every  one  that  the  Egyptian  religion 
was  a  developed  ancestor- worship.  But  such  proofs  appear  to  have  no 
effects  in  the  minds  of  the  theologians  and  the  mythologists." 

The  butterfly  in  the  net,  the  <^uxh  in  the  dungeon;  thought,  fettered 
with  sense  and  reason,  is  forced  to  one  of  the  following  positions:  It 
ceases  to  think  at  all,  it  accepts  Atomism  or  Skepticism,  or  it  begins  to 
analyze  experience  as  its  sole  resource.  Its  movement  from  this  point 
will  depend  upon  what  it  understands  by  experience.  If  it  regards 
certain  phases  of  thought  leading  into  German  metaphysics,  as  embraced 
in  experience,  it  can  follow  Kant  with  the  Practical  Reason.  If  it  regards 
the  possibilities  of  thought  as  exhausted  in  earlier  systems,  it  may  at- 
tempt an  eclectic  process  of  selection  with  M.  Cousin.  Other  concep- 
tions of  experience  may  lead  to  various  forms  of  Pragmatism  with  James 
or  Bergson.  If  it  regards  the  experimental  sciences  as  exhausting  the 
field  of  human  experience,  it  may  follow  Comte  in  his  positive  formula- 
tion of  these.  If  it  regards  a  wider  synthesis  as  possible,  it  may  follow 
Mr.  Spencer  with  his  Synthetic  Philosophy.  The  position  chosen 
among  these  or  other  attitudes  of  modern  thought  depends  upon  the 
meaning  lent  to  "experience." 

None  of  these  positions,  however,  satisfies  a  portion  of  the  thinking 
or  of  the  unthinking  world.  Inductions  based  upon  experience,  in  its 
philosophic   sense,   seem  incapable  of  reaching   the   theological   and 

»  Vol.II.,  Js84.  P.67S. 

«  Vol.  II.,  S  S86.  p.  6g3,  note. 


Bk.  IV  Christ  535 

mythological  intellects.  As  Mr.  Spencer  says,  they  seem  "impervious" 
to  his  most  seductive  generalizations  of  this  nature. 

If  the  theologians  and  mythologists  had  attempted  to  demonstrate 
to  Mr.  Spencer  the  truth  of  some  theory  of  vision  or  application  of 
force,  by  means  of  symbolized  deductions  from  the  Sybiline  oracles, 
or  mystical  citations  from  inspired  writings,  the  chances  are  that  Mr. 
Spencer  would  have  been  as  "impervious"  to  their  demonstrations  as 
the  theologians  to  Mr.  Spencer's  theory  that  ghost-propitiation  was 
the  origin  of  all  religion.  Mr.  Spencer  would  probably  have  said  that 
a  false  method  leading  nowhere  had  been  adopted.  And  here  the  ques- 
tion might  be  asked,  whether  Mr.  Spencer  had  not  adopted  an  analogous 
method  in  his  religious  investigations;  whether,  in  fact,  in  attempting 
to  judge  the  entire  field  of  religion,  or  of  ultra-rational,  ultra-sensible 
experience  by  means  of  empirical  and  anthropological  standards,  Mr. 
Spencer  had  not  confused  two  distinct  fields  of  inquiry.  The  very 
imperviousness  of  the  theological  intellect  to  the  results  of  such  methods 
suggests  the  thought.  A  system  to  which  a  large  part  of  the  intellectual 
world  is  impervious  seems  proportionately  lacking;  correspondingly 
devoid  of  the  essentials  of  a  perfect  synthesis.  Mr.  Spencer  speaks  of 
religion  everywhere  present  in  human  history  as  expressing  some  "  eter- 
nal fact,"  as  having  a  "basis  in  the  reality  of  things,"  as  "standing  for 
truths  not  to  be  ignored,"  as  being  with  science  "a  constituent  of  the 
great  whole,"  as  "having  something  worthy  to  be  understood,"  that 
"when  recognized  will  be  the  basis  of  a  complete  reconciliation";  yet  all 
Mr.  Spencer  has  to  offer  toward  such  recognition  and  reconciliation  is  a 
theory  of  "ghost-propitiation."  And  here  occurs  a  question  with  refer- 
ence to  the  meaning  of  the  word  "experience"  in  inquiry. 

Experience  can  have  but  one  comprehensive,  philosophic  meaning, 
which  embraces  the  essentials  of  all  phases  of  human  experience.  The 
sum  of  the  historical  records  of  humanity  presents  the  legitimate  field 
covered  by  hmnan  experience,  and  these  records  show  important  evi- 
dence of  experience  referred  to  untra-rational,  ultra-sensible  influence. 
They  show  evidence  of  experience  which  has  dominated,  and  still  dom- 
inates, large  portions  of  mankind,  to  the  apparent  exclusion  of  experi- 
ence to  be  referred  to  rational  or  sensible  causes.  Mr.  Spencer  and 
Professor  Haeckel  may  mass  irrefutable  evidence  through  libraries  of 
volumes;  may  explain  all  the  phenomena  of  nature,  from  the  formation 
of  the  first  nebula  down  to  the  last  sermon  in  Saint  Paul's,  upon  a  mon- 
istic or  ghost-propitiative  hypothesis;  present  them  with  every  scientific 


536  Philosophy  Pt.  IV 

authority,  and  the  result  will  but  demonstrate  the  imperviousness  of 
the  theological  intellect  to  evidence  of  this  nature. 

If  the  most  beautiful  abstractions  of  the  idealistic  philosopher  are 
presented  to  the  experimental  scientist,  in  order  to  show  that  there  are 
no  such  things  as  matter  and  motion,  the  scientist  will  probably  change 
the  subject:  All  his  investigations,  the  entire  action  of  his  faculties, 
are  based  upon  the  existence  of  matter  and  motion,  which  he  perceives 
flowing  beneath  the  observation  of  his  senses,  turn  where  he  will.  If 
an  attempt  is  made  to  demonstrate  to  the  idealistic  thinker  that  nothing 
exists  but  moving  matter,  he  will  perhaps  dechne  to  develop  the  issue, 
for  he  perceives  that  the  demonstration  itself  can  proceed  but  through 
a  sequence  of  ideas  which  the  motion  of  matter  fails  to  explain.  One 
refers  explanation  ultimately  to  sense,  the  other  to  consciousness. 
One  moves  in  a  world  limited  by  sense  impressions,  the  other  in  a  world 
bound  by  subjective  abstractions. 

Thus,  when  it  is  attempted  to  demonstrate  to  the  theologian  that 
matter  and  motion  constitute  the  sum  of  existence,  the  only  thing 
demonstrated  is  the  imperviousness  of  the  theological  intellect  to  the 
evidence  adduced.  The  experimental  scientist  moves  in  a  world  Hmited 
by  his  faculties  of  observation;  he  cannot  follow  the  idealist  in  a  field 
of  rationalized  abstractions;  and  neither  can  follow  the  theologian  who 
moves  in  an  ultra-rational,  ultra-sensible  world.  Neither  Democritus 
nor  Epicurus  can  demonstrate  the  existence  of  their  very  insignificant 
theogonies;  and  where  these  men  fail  in  such  modest  efforts,  success 
need  scarcely  be  expected  where  others  labour  under  much  heavier  theo- 
logical burdens.  Here  another  method  of  inquiry  may  be  suggested 
with  reference  to  an  analysis  of  experience. 

Since  the  days  of  Protagoras,  no  rational  intelligence  accepts  explana- 
tion not  containable  within  itself.  The  Cosmos,  then,  in  its  philo- 
sophic sense,  can  mean  but  the  external  world  as  reflected  in  the  percipi- 
ent subject.     What  then  is  the  Cosmos? 

"Matter,"  says  one  school,  and  explains  all  phenomena  satisfactorily 
to  itself  upon  this  hypothesis.  To  another  school  this  hypothesis 
leaves  all  the  phenomena  of  mind  unex-plained.  "The  Cosmos  consists 
of  idealistic,  subjective  impressions,"  says  this  school,  and  offers  cor- 
responding explanations.  But  both  these  hypotheses  break  down  when 
brought  in  contact  with  the  demands  of  another  school  as  explaining  the 
phenomena  of  religion.  These  answers,  therefore,  are  acceptable  as 
far  as  they  go,  but  incomplete  where  they  fail. 


Bk.  IV  Christ  537 

The  student  of  Aristotle  will  recall  his  method  in  the  Ethics  of  re- 
solving the  human  consciousness  into  certain  elements  for  examination. 
This  method  might  here  be  adopted.  Human  experience  is  written  in 
human  history;  this  experience  shows  that  man  has  approached  the 
problems  of  existence  from  three  distinct  positions:  The  physical, 
the  psychical,  and  the  theological.  History,  or  the  book  of  human 
experience,  is  written  with  three  pens  dipped,  as  it  were,  in  sense,  in 
reason,  and  in  something  other  than  these.  The  human  consciousness 
might  thus  be  compared  to  a  triangular  prism;  the  ray  of  light  derived 
from  external  nature  being  broken,  as  it  is  reflected  from  its  surface 
and  resolved  into  a  spectrum;  thus  forming  the  impression  upon 
the  subject  derived  from  the  "sum  of  things";  the  rays  and  colours 
may,  of  course,  subdivide  and  intermingle  in  endless  combinations  and 
variations. 

Thus,  to  continue  the  analogy,  the  sides  of  the  prism  might  represent 
pure  sense,  pure  reason,  and  something  which  eludes  the  most  per- 
sistent scrutiny  of  both.  This  third  side  might  be  called  Life,  or  God. 
Any  comprehensive  analysis  of  experience  should  apparently  include 
these  three  elements,  for  the  records  of  consciousness,  or  the  experi- 
ence of  mankind,  present  evidence  of  all  three  to  the  observation;  as 
Mr.  Spencer  says,  "everywhere  present  as  a  weft  running  through  the 
warp  of  human  history."  The  thought  of  even  the  first  and  greatest  of 
"atheists  and  materialists,"  Democritus  and  Epicurus,  presents  evidence 
of  this  nature  in  no  negligible  quantity;  while  other  minds  and  even  whole 
historical  epochs  seem  dominated  by  no  other  influence.  The  phe- 
nomena of  religion  are  as  persistent  in  history  as  those  of  any  other  phase 
of  experience.  "The  world,"  says  Tyndall,^  "will  have  a  religion  of 
some  kind." 

The  pure  materialist  disregards  the  philosophic  significance  of  this 
fact;  posits  an  inscrutable  mystery  which  he  calls  Matter,  and  bases 
his  interpretations  of  nature  thereon.  The  idealist  neglects  the  evidence 
of  sense,  resolves  the  world  into  another  inscrutable  mystery  which  he 
calls  Mind,  and  develops  idealistic  systems.  Another  type  of  consciousness 
begins  its  investigations  by  positing  another  inscrutable  mystery,  which 
it  calls  God,  and  weaves  endless  theological  formulae.  To  these  three 
elements  of  human  consciousness  may  the  sum  of  human  experience  be 
traced,  and  a  comprehensive  conception  of  experience  should  embrace 
all  three;  for  the  reason  that  evidence  of  all  three  is  everywhere  found 

'  fragments  of  Science,  Vol.  II.,  p.  asa 


538  Philosophy  Pt.  IV 

and  the  field  of  experience  can,  consequently,  not  be  covered  without  all 
three  hypotheses. 

In  ultimate  analysis  all  three  of  these  elements  of  consciousness 
present  a  blank  and  formless  chaos,  one  no  less  than  another,  and  may 
thus  be  regarded  as  the  three  final  phases  of  consciousness,  or  sides, 
of  the  psychical  prism.  This  prism,  then,  may  be  examined  under 
three  headings:  The  Law  of  Substance,  the  Law  of  Reason,  and  the 
Law  of  God. 

The  Law  of  Substance  seems  to  be  Atomism,  the  Law  of  Reason 
skeptical  quietism.  What  then  is  the  law  of  something  other  than  these? 
How  may  it  be  discovered,  how  determined  within  the  human  conscious- 
ness? In  what  way  should  a  rational  study  of  religious  experience 
proceed?  By  what  standards  should  it  be  judged?  What  method 
adopted  in  its  analysis? 

Comte,  in  his  Positive  system  of  experience  neglects  religious  experi- 
ence altogether,  and  attempts  to  divert  the  religious  instinct  to  what 
Huxley  calls  "anthropolatry."  Mr.  Spencer,  who  presents  perhaps  the 
most  extensive  synthesis  of  experience  yet  formulated,  refers  his  examina- 
tion of  religious  experience  to  social,  political,  and  anthropological 
standards  and  reduces  the  entire  field  to  "ghost-propitiation."  But 
if  the  human  consciousness  presents  three  distinct  sides  to  external 
nature  —  that  is,  if  history  traces  experience  in  three  distinct  fields  —  it 
seems  that  the  interpretation  of  the  experience  of  religion  in  terms 
applicable  to  political  or  pathological  inquiry  may  be  considered  as 
unscientific. 

If,  as  Mr.  Spencer  says,  religion  may  be  regarded  as  "one  constituent 
of  the  great  whole,"  with  a  "basis  in  reality"  to  be  "treated  as  a  sub- 
ject of  science,"  it  may  seem  that  the  same  method  should  be  brought 
to  the  study  of  religion  as  to  the  study  of  any  other  phenomena  express- 
ing some  "eternal  fact." 

To  interpret  the  phenomena  of  matter  in  terms  of  the  phenomena  of 
matter  is  not  alone  legitimate  but  essential  to  intelligent  investigation. 
To  interpret  rationalized  thought  in  rational  terms  is  equally  necessary; 
but  to  interpret  the  phenomena  of  matter  in  terms  of  idealistic  abstrac- 
tions, independently  of  experience,  can  lead  to  no  intelligent  result; 
any  more  than  the  attempt  to  judge  of  a  generalization  by  means  of 
weight  or  chemical  analysis;  for  a  generalization,  as  such,  can  neither 
be  weighed  nor  analyzed  in  a  laboratory.  A  generalization  can  only  be 
analyzed  legitimately  in  relation  to  other  generalizations  dealing  with 


Bk.  IV  Christ  539 

phenomena  of  the  same  kind  and  belonging  to  the  same  field  of  inquiry. 
Thus  rationalized  conceptions  can  properly  be  analyzed  but  in  relation 
to  rational  conceptions ;  the  phenomena  of  matter  in  relation  to  analogous 
phenomena  of  matter;  and,  by  the  same  rule,  the  phenomena  of  religion 
can  be  analyzed  rationally  and  ''as  a  subject  of  science"  in  relation  to 
analogous  phenomena  alone;  that  is,  in  relation  to  the  phenomena  of 
religion. 

In  the  history  of  the  development  of  the  experimental  sciences  there 
is  a  large  field  traceable  to  political  and  religious  influences.  This  fact, 
however,  presents  but  slight  justification  for  referring  all  science  to 
political  or  religious  origins.  Thus  the  reference  of  all  religious  experience 
to  anthropological  sources  may  seem  not  unlike  gauging  the  power  of 
an  electric  dynamo  with  a  yardstick,  or  the  speed  of  a  ship  with  a  ther- 
mometer. The  history  of  thought  is  but  the  story  of  the  action  and 
reaction,  upon  each  other,  of  ideas  derived  from  three  distinct  sources ; 
and  as  such  suggests  that  the  phenomena  of  religion  cannot  be  approached 
from  the  empirical,  or  anthropological,  point  of  \dew.  That  side  of 
the  psychic  prism  presenting  its  surface  to  ultra-human  influences  is 
as  impervious  to  the  light  which  pierces  the  other  sides  as  one  of  these 
to  the  light  which  pierces  the  other;  and  the  attempt  to  trace  ultra- 
rational,  ultra-sensible  phenomena  through  rational,  sensible  categories 
seems  a  false  method. 

It  is  a  question  whether  any  pure  intelligence,  any  Greek,  such  as 
Gorgias  or  Aristotle,  would  adopt  such  a  method  with  the  material  at 
hand  which  modern  scholarship  presents  for  a  comparative  analytical 
examination  of  the  field  of  religion,  as  religion.  Gorgias^  shows  that 
what  is  evident  to  one  sense  cannot  be  referred  to  another;  and  that 
phenomena  can  be  judged  but  by  a  criterion  of  the  same  kind.  "Science 
and  method  begin,"  says  Aristotle,^  "when  from  many  conceptions 
derived  from  experience  one  universal  conception  is  evolved  which 
will  embrace  similar  cases."  It  is  obvious  in  inquiry  that  cases  must  be 
similar  and  the  criterion  adopted  of  the  same  kind  as  the  things  judged. 

It  may  thus  seem,  if  the  human  mind  is  ever  to  reach  a  comprehen- 
sive synthesis  of  experience,  that  such  a  synthesis  should  embrace  all 
experience;  that  is,  include  religious  experience.  This,  it  seems,  can  be 
done  but  by  adopting  the  same  method  with  reference  to  the  phenomena 
of  religion  that  the  scientist  would  adopt  with  reference  to  scientific 

'  Sextus  Empiricus.    Adv.  Log.  VU.  8i,  p.  289. 
.*  Mctaph.  A.  I,  981  a  5, 


540  Philosophy  Pt.  IV 

thought.  He  would  turn  the  attention  to  the  study  of  the  minds  which 
had  dominated  the  history  of  their  fields;  for  he  would  know  that  by 
this  means  alone  could  be  reached  the  final  comprehensive  sources  of 
the  experience  considered;  and  when  this  same  method  is  adopted  with 
reference  to  religious  experience,  will  a  comprehensive  conception  of 
the  subject  be  approached. 

The  fact  that  the  evolution  of  the  natural  sciences  presents  an  enor- 
mous mass  of  ignorance,  error,  dogmatic  theorizing,  empirical  and 
a  priori  speculation,  need  not  lead  to  the  opinion  that  the  best  thought 
arising  from  it  is  pure  fallacy.  The  fact  that  the  human  philosophic 
reason  throughout  its  entire  history  has  done  nothing  but  develop  a 
series  of  rings,  collapsing  periodically  in  exactly  the  same  phases  of 
Atomism  and  Skepticism,  need  not  lead  to  the  total  neglect  of  the  ra- 
tional faculties.  Thus,  in  the  same  way,  the  fact  that  a  vast  amount  of 
the  phases  of  religion  to  be  seen  in  every  part  of  the  world  is  but  a 
dreary  repetition  of  the  same  dull  dogma  and  superstition,  need  not 
lead  to  the  denial  of  the  existence  of  God.  The  human  mind  would 
have  to  transcend  the  conditions  of  its  existence  in  order  to  demonstrate 
either  the  non-existence  or  the  existence  of  God,  and  all  such  attempts,  as 
Huxley  says,  are  but  ''senseless  babble"  or  "lunar  politics." 

The  method  adopted  in  any  comprehensive  analysis  of  experience  should 
be  the  method  of  that  Muse  whom  Huxley  calls  his  "liege  lady" — 
Natural  Science.  It  should  be  the  same  method  as  that  of  the  metallur- 
gist in  his  laboratory,  in  making  a  test  for  copper  or  gold.  He  first 
samples  all  material  to  be  examined,  with  reference  to  a  given  relative 
standard.  He  next  reduces  these  samples  to  a  single,  proportionately 
representative  body;  and  the  nugget  of  pure  metal  remaining  in  the 
crucible  after  this  has  been  put  through  the  furnace  and  all  flux  removed 
is  that  of  which  he  is  in  search :  the  unit,  by  means  of  which  the  value 
of  all  the  ore  bodies  under  observation  may  be  judged.  It  may  be 
said,  however,  that  he  never  mixes  bodies  which  have  no  relation  to  each 
other.  He  never  mixes  iron  ore  with  gold-bearing  quartz  —  he  keeps 
his  samples  and  his  metal  pure. 

The  questions  met,  therefore,  with  reference  to  religion  are:  What 
is  the  material  to  be  examined?  How  may  the  necessary  samples  be 
obtained?  How  may  these  be  put  through  the  furnace  of  comparative 
analysis,  and  how  reduced  to  a  single  body?  To  the  first  question,  in 
any  inquiry  based  upon  experience,  there  can  be  but  one  answer:  the 
material  to  be  examined  should  be  the  entire  body  of  thought,  in  its 


Bk.  IV  Christ  541 

most  authoritative  form,  that  has  dominated  the  religious  history  of 
man.  The  answer  to  the  second  question  seems  equally  obvious: 
the  samples  can  only  be  obtained  by  choosing,  from  the  ultimate  sources 
examined,  certain  characteristic  thought  with  reference  to  typically 
religious  problems.  These  can  then  be  reduced  to  a  single  body  by 
being  brought  together  and  compared  one  with  another  in  their  re- 
lations to  these  problems.  This  whole  process,  with  the  exception  of  a 
single  final  test,  has  been  completed.  The  fundamental  questions  of 
religion  have  been  stated  to  the  sources.  Their  answers  have  been 
gathered  and  compared.  The  essential  problems  with  which  religion 
deals  were  found  to  be  four  —  God,  Immortality,  Mediation,  Ethics. 
Varying  answers  were  discovered  to  these  questions,  certain  teachers 
lending  greater  prominence  to  one  question  than  to  another,  or  neglect- 
ing issues  which  other  teachers  regarded  as  of  paramount  importance. 
Thus,  Confucius  neglects  the  ideas  of  God  and  immortality,  and  turns 
his  thought  largely  to  ethics.  Mohammed  dwells  at  great  length 
upon  God  and  immortality,  and  seems  less  interested  in  ethical  ques- 
tions than  others.  Zoroaster,  Socrates,  Plato,  and  the  Upanishads  dwell 
largely  upon  man's  immortal  nature,  and  his  union  with  God  as  his 
highest  hope.  Buddha  seems  to  turn  his  thought  chiefly  to  earthly  love  and 
pity.  All  this  thought,  however,  when  brought  together  and  compared, 
presents  a  certain  consistent  attitude  toward  religious  problems;  a  chain, 
as  it  were,  running  through  all  religions,  binding  them  more  or  less  closely 
together.  This  chain  of  thought  thus  seemed  to  lead  to  the  essentials  of 
a  typical  or  universal  religion  embracing  the  others.  This  religion  pre- 
sented the  following  atitudes  toward  fundamental  religious  problems: 

1 .  The  recognition  of  an  infinite  Intelligence,  or  self-conscious,  spir- 
itual Divinity. 

2.  Man's  immortality  or  union  with  God. 

3.  The  divine  inspiration  of  certain  teachers. 

4.  A  system  of  ethics  or  morality  which  almost  invariably  takes 
the  form  of  the  injunction  of  doing  unto  others  as  we  would  have  them 
do  unto  us. 

The  words  of  one  important  religious  teacher  remain  to  be  studied. 
These  four  questions  may  now  be  answered  in  the  words  of  Jesus  of 
Nazareth:    God?    Immortality?    Mediation?    Ethics?    He  says: 

I.  God?  "  God  is  a  Spirit:  and  they  that  worship  him  must  worship 
in  spirit  and  truth." ^ 

ijohn.  IV:  24 


542  Philosophy  Pt.  IV 

2.  Immortality?  "Verily,  verily,  I  say  unto  you,  If  a  man  keep  my 
word,  he  shall  never  see  death."  ^ 

"Neither  for  these  only  do  I  pray,  but  for  them  also  that  believe  on 
me  through  their  word;  that  they  may  all  be  one;  even  as  thou,  Father, 
art  in  me,  and  I  in  thee,  that  they  also  may  be  in  us."^ 

3.  Mediation?  "And  the  high  priest  said  unto  him,  I  abjure  thee 
by  the  living  God,  that  thou  tell  us  whether  thou  be  the  Christ,  the 
Son  of  God.  Jesus  saith  unto  him.  Thou  hast  said."^ 

4.  Ethics?  "All  things  therefore  whatsoever  ye  would  that  men 
should  do  unto  you,  even  so  do  ye  also  unto  them :  for  this  is  the  law  and 
the  prophets."^ 

These  words  seem  to  contain  the  vital  elements  of  all  Science,  Rea- 
son, and  Religion. 

In  Ethics,  they  exhaust  the  best  that  Science  and  Reason  have  to 
offer;  Science  and  Reason  can  go  no  farther. 

In  their  conception  of  Mediation,  they  present  a  comprehensive 
Intelligence  which  postulates  itself. 

Their  conception  of  Immortality  rises  to  that  of  the  noblest  of  the 
Upanishads;  in  their  hope  of  the  union  of  God  and  man,  in  a  way  that 
ennobles  man,  but  in  no  sense  debases  God. 

The  conception  of  God  as  a  Spirit,  whose  worship  is  Truth,  has  never 
been,  and  probably  never  will  be,  transcended  by  the  human  mind. 
SaysRenan:^ 

"The  day  he  pronounced  those  words,  he  really  was  the  Son  of  God. 
He  spoke  for  the  first  time  the  word  on  which  shall  rest  the  religion 
of  Eternity.  He  founded  the  pure  worship  of  no  age  nor  land;  the 
religion  of  every  lofty  soul  until  the  end  of  time.  His  religion  on  that 
day  was  not  only  the  religion  of  humanity,  it  was  the  absolute  religion; 
and,  if  on  other  planets  beings  dwell,  endowed  with  reason  and  morality, 
their  religion  can  never  be  other  than  that  which  Jesus  proclaimed  at 
Jacob's  well.  Man  could  not  rest  therein,  for  one  attains  the  ideal  for 
but  a  moment.  The  word  of  Jesus  was  a  gleam  in  a  sombre  night.  It 
has  taken  eighteen  hundred  years  for  the  eyes  of  mankind  (what  do  I  say, 
for  an  infinitely  small  portion  of  mankind)  to  grow  accustomed  to  it. 
But  the  gleam  shall  become  the  full  day;  and,  after  having  exhausted 

1  Ibid..  VUI:  SI. 
>Ibid..  XVII:  20. 
'Matt..  XXVI:  63. 
Ubid.,  VII:  12. 
'  Vie  de  Jisus,  p.  244. 


Bk.  IV  Christ  543 

every  circle  of  error,  humanity  will  return  to  those  words  as  to  the  im- 
mortal expression  of  its  faith  and  of  its  hope." 

These  words  contain  the  essence  of  the  scientifically  reasoned  philo- 
sophic systems  and  great  religions  of  the  world.  If  the  total  of  human 
experience  may  be  referred  to  three  comprehensive  fields,  the  world,  as 
reflected  in  the  human  experience,  or  consciousness,  must  be  regarded  as 
a  triple,  not  as  a  single  or  a  dual,  object  of  study;  and  the  three  sides  it 
presents  are  Sense  and  Reason,  and  something  other  than  either.  Sense 
and  Reason  when  fully  analyzed,  singly  or  combined,  reduce  the  world 
and  man  to  a  formless  chaos  of  substance  or  ignorance,  and  then  unite 
in  the  Ethics  of  Christ  as  their  only  vital  principle. 

The  words  of  Christ  then  transcend  these  and  embrace  the  best  of 
the  religions  of  the  world.  Thus,  human  experience  in  its  comprehensive 
sense:  Science,  Reason,  and  Religion  combined,  might  be  summarized 
in  the  thought  suggested  by  the  one  word  —  Christ. 

This  is  the  nugget  of  pure  metal  lying  at  the  bottom  of  the  crucible. 
In  the  words  of  Renan:    "He  really  was  the  Son  of  God." 


Part  V 


BOOK  I 
POLITICAL   THEORY 

BOOK   II 
POLITICAL  PRACTICE 

BOOK   III 
PRACTICAL   POLITICS 


Book  I 

POLITICAL    THEORY 
CHAPTER  I 

INTRODUCTION 

MAN,"  says  Aristotle,^  "is  naturally  a  political  animal." 
If  so,  it  seems  that  many  of  man's  most  enduring  achieve- 
ments should  be  sought  within  the  field  of  social  and 
political  organization.  Yet,  since  the  great  Athenians, 
political  history  presents  slight  realization  of  such  hope,  there  are  few 
subjects  seemingly  within  the  legitimate  range  of  the  human  intelligence 
involving  such  illusive  and  conflicting  material,  and  in  which  so  little 
progress  may  be  traced  since  the  first  systematic  statement  of  its 
problems.  Political  thought  to-day,  in  its  more  general  aspects,  is 
concerned  with  much  the  same  questions  with  which  it  was  occupied 
some  thousands  of  years  ago. 

The  fundamental  problems  in  administrative  organization  are  the 
relations  to  the  society  and  to  each  other  of  the  different  administrative 
powers  created.  How  are  these  powers  to  be  derived?  Upon  what 
principle  should  their  control  be  governed?  These  are  the  first  questions 
met  in  the  organization  of  political  systems.  In  nearly  every  field  of 
thought,  inquiry  exhausts  itself  sooner  or  later,  in  a  position  developed 
in  Athens  over  two  thousand  years  ago  as  the  ultimate  analysis  of  which 
the  subject  is  capable.  Political  inquiry  is  no  exception.  The  old 
Greek  analysis  of  the  One,  the  Few,  and  the  Many  exhausts  the  classi- 
fication of  the  forms  in  which  the  administrative  powers  of  political 
systems  may  exist.  Aristotle  accepts  this  analysis  and  says^  that  the 
supreme  authority  of  States  must  be  in  the  hands  of  One,  of  Few,  or  of 
Many.  Where  these  systems  appear  in  their  perfectly  realized  form, 
the  resulting  society  presents  a  pure  Autocracy,  a  pure  Aristocracy,  or  a 
pure  Democracy.    When,  however,  any  one  of  these  pure  forms  i? 


«  Politics.  A.  2,  1 253  a  a. 
*  Ibid.,  r.  7,  1279  a  a;. 


547 


548  Political  Theory  Pt.  V 

brought  into  actual  existence,  there  is  always  a  tendency  to  degenerate 
into  what  might  be  called  its  corresponding  corruption. 

Thus,  a  society  which  selects  its  ablest  man,  and  gives  him  absolute 
power,  establishes  a  pure  kingship,  or  Autocracy;  but  with  changing 
conditions  or  under  his  less  able  successors,  this  Autocracy  will  gradually 
be  transformed  into  an  oppressive  tyranny,  or  despotism.  Again, 
where  a  society  surrenders  its  powers  to  a  few  men  of  the  highest  attain- 
ments or  birth,  the  society  establishes  an  Aristocracy  which  may  be  of 
great  temporary  advantage.  Experience  shows,  however,  that  a  pure 
Aristocracy  sooner  or  later  abuses  its  power  and  degenerates  into  a 
corrupt  oligarchy.  Again,  a  society  attempting  to  govern  itself  through 
the  popular  will  alone  shows  an  inevitable  tendency  to  develop  into  a 
formless  and  headless  body  under  mob  rule;  a  condition  of  which  the 
rule  of  the  One  usually  presents  the  only  available  remedy. 

If  these  are  the  ultimate  forms  in  which  political  society  may  be 
organized,  and  if  each  shows  a  tendency  to  change  and  degenerate, 
it  seems  that  the  history  of  the  typical  society  will  present  a  sequence  of 
these  administrative  phases  gradually  superseding  each  other;  the  pure 
form  originally  established  degenerating  into  its  corresponding  corruption 
when  a  revolutionary  change  will  occur;  the  earlier  form  being  replaced 
by  another,  until  all  the  phases  are  exhausted;  when  the  society  will 
begin  to  repeat  the  process.  This  seems  in  fact  to  be  the  law  of  what 
might  be  called  political  motion.  This  law  has  been  observed  and  for- 
mulated by  the  most  competent  political  and  constitutional  observers. 
The  natural  sequence  seems  to  be  in  the  order  named.  In  its  earliest 
stages,  when  the  need  for  thoroughly  centralized  authority  is  great,  a 
society  generally  develops  a  pure  kingship,  or  Autocracy,  which  sooner 
or  later  becomes  a  despotic  tyranny.  The  strongest  men  will  then  organ- 
ize in  order  to  rid  themselves  of  the  tyrant  and  found  an  aristocratic 
system.  The  Aristocracy  will  become  an  oppressive  oligarchy,  which 
the  people  will  eventually  throw  ofif  and  found  a  Democracy.  The 
Democracy  will  fall  into  the  hands  of  the  corruptionists,  develop  factions 
and  civil  wars,  with  the  result  that  the  society  will  be  forced  to  throw 
itself  imder  the  sword  of  a  dictator  and  the  process  begins  anew. 

It  is,  of  course,  under  exceptional  conditions  that  one  man  will  be 
able  to  trace  the  entire  sequence  in  any  single  society;  for  the  life  of  the 
organization  may  outlast  that  of  its  units  many  times  over.  Yet  the 
lives  of  certain  men  at  times  happened  to  fall  at  such  periods  that 
their  opinions  with  reference  to  political  and  constitutional  changes  are 


Bk.  I  Introduction  549 

of  peculiar  interest.  In  the  entire  range  of  history  the  field  of  this  nature 
opened  to  Polybius  was  perhaps  unique.  As  a  Greek  he  was  in  pos- 
session of  the  best  of  Hellenic  thought;  but,  his  life,  falling  as  it  did 
toward  the  close  of  Greek  civilization,  and  passed  largely  at  Rome 
showed  him  the  birth  and  growth  of  a  new  power  and  all  the  political 
movements  of  that  exceptional  period.  Two  worlds  were  thus  unfolded 
to  the  view  of  a  single  man,  and  one  well  equipped  for  their  intelligent 
observation.  The  value  of  the  opinion  of  Polybius  with  reference  to 
constitutional  evolution  could  not  be  better  shown  than  in  the  words  of 
Freeman:^ 

"There  was  one  Greek  historian  before  whose  eyes  the  history  of  the 
world  was  laid  open  as  it  never  was  to  any  other  man  before  or  after. 
There  was  one  man  who,  in  the  compass  of  a  single  life,  had  been  as  it 
were  a  dweller  in  two  worlds,  in  two  wholly  different  stages  of  man's 
being.  To  the  experience  of  Polybios  the  old  life  of  independent  Greece, 
the  border  warfare  and  the  internal  politics  of  her  commonwealths, 
had  been  the  familiar  scenes  of  his  earlier  days.  His  childhood  had 
been  brought  up  among  the  traditions  of  the  Achaian  League,  among 
men  who  were  fellow-workers  with  Markos  and  Aratos.  His  birth 
would  almost  fall  in  days  when  Megalopolis  stood,  imder  the  rule  of 
Lydiadas,  as  an  independent  unit  in  the  independent  world  of  Hellas. 
The  son  of  Lykortas,  the  pupil  of  Philopoimen,  may  have  sat  as  a  child 
on  the  knees  of  the  deliverer  of  Siky6n  and  Corinth.  He  could  remember 
the  times  when  the  tale  of  the  self-devotion  of  their  illustrious  tyrant 
must  have  still  sounded  like  a  trumpet  in  the  ears  of  the  men  of  the  Great 
City.  He  had  himself  borne  to  the  grave  the  urn  of  the  last  hero  of  his 
native  land,  cut  off,  as  Anaxandros  or  Archidamos  might  have  been,  in 
border  warfare  with  the  rebels  of  Messing.  He  could  remember  times 
when  Macedonia,  perhaps  even  when  Carthage,  was  still  an  independent 
and  mighty  power,  able  to  grapple  on  equal  terms  with  the  advancing, 
but  as  yet  not  overwhelming,  power  of  Rome.  He  lived  to  see  all 
swept  away.  He  lived  to  see  Africa,  Macedonia,  and  Greece  itself, 
either  incorporated  with  the  Roman  dominion  or  mocked  with  a 
shadow  of  freedom  which  left  them  abject  dependents  on  the  will  of 
the  conquering  people.  He  saw  the  dominion  of  the  descendants  of 
Seleukos,  the  truest  heirs  of  Alexander's  conquests,  shrink  up  from  the 
vast  empire  of  western  Asia  into  the  local  sovereignty  of  a  Syrian  king- 
dom.   He  saw  Pergamos  rise  to  its  momentary  greatness  and  Egypt 

'  Comparative  Politics,  p.  203. 


5 so  Political  Theory  Pt.  V 

begin  the  first  steps  of  its  downward  course.  He  saw  the  gem  of  Asiatic 
history,  the  wise  Confederation  of  Lykia,  rise  into  being  after  the  model 
of  the  State  in  which  his  own  youth  had  been  spent.  He  lived  to  stand 
by  the  younger  Scipio  beside  the  flames  of  Carthage,  and,  if  he  saw  not 
the  ruin  of  Corinth  with  his  own  eyes,  he  lived  to  legislate  for  the  help- 
less Roman  dependency  into  which  the  free  Hellenic  League  of  his  youth 
had  changed.  The  man  who  saw  all  this  saw  changes  greater  than  the 
men  who  lived  in  the  days  of  Theodoric  and  Justinian,  or  the  men  who 
lived  in  the  days  of  the  elder  Buonaparte." 

This  passage  suggests  political  changes  involving  several  generations, 
the  lives  of  many  millions  of  men,  and  scores  of  constitutional  systems. 
The  movement  of  so  many  political  aggregates  passing  through  different 
constitutional  phases,  as  Freeman  says,  in  all  likelihood  never  fell  before 
or  since  beneath  the  eyes  of  a  single  trained  observer.  The  opinion  of 
Polybius,  therefore,  with  reference  to  the  movement  of  constitutional 
systems  is  worth  attention. 

The  cycle  mentioned  is  that  observed  by  Polybius:  Autocracy,  Aris- 
tocracy, Democracy,  which  seem  to  degenerate  progressively  and  follow 
each  other  automatically  whenever  men  unite  in  the  formation  of 
political  society.  "This,"  says  Polybius, ^  "is  the  regular  cycle  of 
constitutional  revolutions,  and  the  natural  order  in  which  constitutions 
change,  are  transformed,  and  return  again  to  their  original  stage.  If  a 
man  have  a  clear  grasp  of  these  principles  he  may  perhaps  make  a  mis- 
take as  to  the  dates  at  which  this  or  that  will  happen  to  a  particular 
constitution;  but  he  will  rarely  be  entirely  mistaken  as  to  the  stage  of 
growth  or  decay  at  which  it  has  arrived,  or  as  to  the  point  at  which  it 
will  undergo  some  revolutionary  change." 

The  pure  forms  of  Autocracy,  Aristocracy,  and  Democracy  rarely 
appear  upon  the  stage  of  events;  the  average  constitution  being  one  in 
which  these  are  mixed  in  different  combinations.  In  no  mixed  system, 
however,  has  a  perfect  balance  ever  been  obtained  between  these  powers, 
one  or  the  other  always  gains  an  ascendency,  encroaches  upon  the  fields 
of  the  others,  and  sooner  or  later,  with  increasing  influence,  develops  its 
own  pure  form.  When  a  pure  power  thus  appears,  the  society  often 
begins  to  pass  through  the  pure  phases  of  the  sequence  traced.  When 
this  momentum  is  exhausted,  mixed  forms  reappear  and  the  process 
repeats  itself. 

Aristotle's  study  of  the  Greek  states  under  his  observation  led  him  tq 

^  •  The  Histories  of  Polybius,  VI.,  g,  Shuchburgh's  Translation,  Vol.  I,  p.  466, 


Bk.  I  Introduction  551 

regard  that  mentioned  as  the  most  natural  sequence  through  which  con- 
stitutional changes  occur.  ^  The  most  noteworthy  constitutional  sequence 
in  antiqmty,  however,  is  upon  the  great  stage  of  Roman  history;  the 
political  and  legal  genius  of  the  Roman  people  lending  it  peculiar  effect 
and  interest.  Thus  the  early  autocratic  kingship  degenerates  into  the 
usual  despotic  tyranny.  This  throws  suflScient  power  into  the  hands  of 
the  leading  men  to  supplant  the  tyranny  with  the  aristocratic  power  of 
the  patricians.  The  abuse  of  this  power  begins  to  throw  the  balance 
toward  the  plebeians,  which  results  in  the  struggle  of  the  orders  and  the 
Marian  upheaval.  The  balance  thrown  entirely  in  the  direction  of  the 
Many,  produces  the  usual  corrupt  plutocracy,  political  factions,  the 
usual  civil  wars  culminating  in  the  usual  dictatorship.  The  society,  after 
going  through  the  regular  forms  of  the  typical  constitutional  sequence 
reproduces  the  pure  autocracy  of  the  first  stage  of  the  social  life  which 
is  followed  by  the  disintegration  of  the  society. 

Thus,  had  Polybius,  after  watching  this  process  in  antiquity,  seen  the 
early  mixed  systems  of  England  gradually  give  way  to  the  pure  despotism 
of  the  Stewarts,  he  would  probably  have  predicted  that  a  constitutional 
revolution  was  to  be  expected.  The  question  would  then  be  whether 
the  balance  would  fall  toward  Aristocracy  or  Democracy.  This  will 
depend  upon  the  relative  stability  of  existing  institutions.  The  popular 
Assembly  held  the  balance  with  the  result  that  a  pure  Democracy  was 
established.  Had  he  then  watched  the  hopeless  phases  through  which 
the  Long  Parliament  drifted,  he  would  probably  have  said  that  a  pure 
Autocracy  was  but  a  question  of  time.  When  the  society  had  reestab- 
lished a  pure  one-man  power,  with  Cromwell  in  control,  he  would  possibly 
have  said  that  the  pure  phases  were  now  exhausted;  that  the  Autocracy 
would  collapse  and  the  society  go  back  to  a  mixed  system  with  Aris- 
tocratic leaning. 

Had  Polybius  watched  the  earlier  mixed  constitutions  of  France 
gradually  crystallize  into  the  pure  despotism  of  the  Bourbons,  he  would 
perhaps  have  wondered  what  form  the  Revolution  would  take.  If  the 
Aristocracy  supports  despotism,  the  power  will  fall  toward  Democracy, 
as  it  had  in  England  in  the  previous  century.  Democracy  in  control 
and  mob-rule  everywhere  in  force,  the  date  at  which  a  dictatorship  will 
be  established  becomes  the  next  question.  The  Napoleonic  dictatorship 
in  full  power,  he  would  probably  have  begun  to  estimate  what  mixed 
form  the  society  would  adopt.    When  the  mixed  Monarchy  had  super- 

»  Eth,  Nic.  r.  1 2,  1 160  b  2 J.    Cf.  PolUks  T.  15,  1286  b  8  et  seq. 


552  Political  Theory  Pt.  V 

seded  the  pure  Autocracy,  he  would  have  studied  the  constitution  in 
order  to  see  which  power  held  the  balance  and  would  develop  a  pure  form. 
The  pure  Democracy  of  the  revolution  1848  in  operation,  he  would 
expect  the  pure  power  of  the  second  Republic  to  give  way  to  the  pure 
Autocracy  of  the  second  Empire.  The  pure  Autocracy  in  control,  the 
society  has  again  exhausted  the  pure  sequences,  will  develop  some  more  or 
less  mixed  form  and  get  ready  to  begin  over  again.  It  seems  that  no 
form  of  administrative  organization  has  ever  been  conceived  in  which  the 
final  controlling  power  is  not  in  the  hands  of  one  man,  of  a  few  men,  or  of 
the  representatives  of  the  many;  and  this  controlling  balance,  into  which- 
ever power  it  falls,  is  mathematically  certain  to  develop  a  pure 
power  sooner  or  later,  which  will  degenerate,  and  round  the  society 
will  begin  to  revolve  through  the  usual  rings  of  revolution  and  re- 
organization. 

This  seems  to  be  the  law  governing  the  action  of  organized  constitu- 
tional force.  This  is  the  law  which  led  Talleyrand  always  to  regard 
Napoleon,  even  at  the  height  of  his  power,  as  an  ephemeral  phenomenon 
and  Moscow  as  "the  beginning  of  the  end."  This  is  the  law  which  led 
Macaulay  to  predict  in  1857  that,  as  soon  as  the  land  was  occupied, 
the  population  of  the  American  Republic  would  begin  to  repeat  all  the 
phases  of  older  societies.  "You  may  think  that  your  country  enjoys 
exemption  from  these  evils,"  he  wrote ^  to  Randall;  "I  will  frankly  own 
to  you  that  I  am  of  a  very  different  opinion.  Your  fate  I  believe  to 
be  certain,  though  it  is  deferred  by  a  physical  cause.  As  long  as  you 
have  a  boimdless  extent  of  fertile  and  unoccupied  land,  your  labouring 
population  will  be  far  more  at  ease  than  the  labouring  population  of  the 
Old  World,  and,  while  that  is  the  case,  the  Jefferson  politics  may  continue 
to  exist  without  causing  any  fatal  calamity.  But  the  time  will  come  when 
New  England  is  as  thickly  populated  as  Old  England.  .  .  .  Then 
your  institutions  will  be  fairly  brought  to  the  test.  .  .  .  There  will 
be,  I  fear,  spoliation.  The  spoliation  will  increase  the  distress.  The 
distress  will  produce  fresh  spoliation.  There  is  nothing  to  stop  you. 
Your  constitution  is  all  saU  and  no  anchor.  .  .  .  Either  some 
Caesar  or  Napoleon  will  seize  the  reins  of  government  with  a  strong  hand, 
or  your  Republic  will  be  as  fearfully  plundered  and  laid  waste  by  bar- 
barians in  the  twentieth  century  as  the  Roman  Empire  was  in  the  fifth; 
with  this  difference,  that  the  Huns  and  Vandals  who  ravaged  the  Roman 
Empire  came  from  without,  and  that  your  Huns  and  Vandals  will  have 

>  Macaulay's  Life  and  Letters.     Vol.  II.,  pp.  408,  409. 


Bk.  I  Introduction  553 

been  engendered  within  your  own  country  by  your  own  institutions." 
This  seems  to  be  the  law  governing  political  motion  and,  watched  at 
work  for  thousands  of  years,  it  seems  almost  as  regular  in  its  action  as 
the  law  of  gravitation. 

When  this  law  is  understood,  little  hope  of  stability  will  be  enter- 
tained for  any  of  the  final  forms  of  political  organization  in  their  purity. 
A  pure  Aristocracy  seems  but  the  foundation  for  a  democratic  upheaval ; 
a  pure  Democracy  but  a  dictatorship  in  embryo.  The  result  is  that 
informed  political  inquiry  turns  to  the  development  of  constitutional 
systems  embracing  the  advantageous  elements  of  the  three  adminis- 
trative forms  while  discarding  their  dangers  and  corruptions. 

As  Polybius^  says,  none  of  the  three  forms  in  its  purity  can  be  regarded 
as  the  best.  The  best  constitution,  or  organized  citadel  of  adminis- 
trative power,  should  be  constructed  of  the  best  elements  of  all  three, 
with  the  elimination,  or  counter-checking,  through  another  power  of 
their  dangerous  phases.  This  same  idea  announced  so  many  centuries 
ago  is  constantly  repeated  to-day  wherever  men  turn  their  attention  to 
constitutional  organization.  Says  Freeman r^  "The  older  school  of 
English  constitutional  writers  delighted  to  show  that  the  English  Consti- 
tution contained  a  monarchic,  an  aristocratic,  and  a  democratic  element, 
and  that  the  three  were  wrought  together  in  such  true  and  harmonious 
proportion  that  we  could  enjoy  the  good  side  of  all  the  three  great  forms 
of  government  without  ever  seeing  the  evil  side  of  any  of  them."  This 
is  the  point  at  which  political  inquiry  of  this  nature  begins. 

The  problems  before  the  constitution  builder  is  so  to  combine,  control, 
and  balance  the  powers  entrusted  to  the  One,  the  Few,  and  the  Many, 
that  no  single  power  may  dominate  the  society  or  subvert  the  other  two. 
In  democratic  constitutions  this  may  take  the  form  of  a  system  of 
checks  and  balances  between  the  Executive,  the  Judiciary,  and  the 
Legislature.  The  history  of  Europe  shows,  apparently,  during  the  last 
century,  that  the  English  system  of  a  limited  monarchy,  an  upper  heredi- 
tary Chamber  with  veto  power,  and  a  flexible  Ministry,  representing  the 
majority  of  an  elective  Assembly  is,  for  Anglo-Saxon  society  at  least, 
as  nearly  stable  a  balance  of  administrative  functions  as  has  yet  been 
discovered.  In  such  a  system,  however,  the  beam  of  the  scale  will  fall 
toward  the  lower  House. ^    Had  Polybius  watched  it  at  work,  he  would 

•VI.,  3,  p.  459.  / 

•  Growth  of  the  English  Constitution,  p.  ii. 

'  Cf.  Growth  of  tlie  English  Constitution,  Freeman,  pp.  153,  231. 


554  Political  Theory  Pt.  V 

probably  expect  the  Crown  gradually  to  lose  its  vital  functions,  he  would 
probably  believe  that  friction  between  the  two  Houses  would  tend  to 
check  the  veto  power  of  the  upper  Chamber  and  eventually  reduce  it 
to  a  mere  shell.  If  such  is  the  case,  a  pure  Democracy  is  but  a  question 
of  time. 

When  the  pure  Democracy  is  developed,  the  society  will  reproduce 
the  phases  through  which  it  passed  in  the  seventeenth  century,  recombine 
and  begin  to  repeat  the  mixed  constitutional  forms  through  which  it 
has  been  passing  periodically  for  about  fourteen  hundred  years.  ^  The 
history  of  the  English  Constitution  seems  to  a  large  extent  but  a  repro- 
duction of  the  history  of  other  political  constitutions,  ancient  and  modern .  ^ 
Whatever  mixed  system  a  society  adopts,  it  nearly  always  develops  a 
pure  form  sooner  or  later.  The  society  will  thus  find  itself  periodically 
passing  through  analogous  constitutional  phases;  recombining,  reprodu- 
cing analogous  combinations  and  then  repeating.  In  the  seventeenth 
century  as  Freeman  well  says:^  "A  King  of  England  once  more,  as  in 
the  days  of  Henry  and  Simon,  stood  forth  in  arms  against  his  people 
to  learn  that  the  power  of  his  people  was  a  greater  power  than  his. 
But  in  the  seventeenth  century,  just  as  in  the  thirteenth,  men  did  not 
ask  for  any  rights  and  powers  which  were  admitted  to  be  new;  they  only 
asked  for  the  better  security  of  those  rights  and  powers  which  had  been 
handed  on  from  days  of  old."  Again,^  speaking  of  the  tribunal  before 
which  Charles  the  First  was  arraigned:  "Even  the  vote  by  authority 
of  which  that  tribunal  acted,  the  vote  which  seems  so  strange  and  daring, 
the  vote  which  declared  that  it  was  high  treason  for  a  King  of  England 
to  levy  war  against  his  Parliament,  was  little  more  than  a  translation  of 
an  earlier  vote  which  had  declared  John  to  be  'a  perjured  King  in  re- 
bellion against  his  Barons.'" 

Again,  in  1688,  as  Freeman  says:^  "A  true  Assembly  of  the  nation 
once  more  put  forth  its  greatest  power,  and  chose  William  of  Orange,  as, 
six  hundred  years  before,  another  Assembly  of  the  nation  had  chosen 
Harold  the  son  of  Godwine.  The  cycle  had  come  round;  the  English 
people  had  won  back  again  the  rights  which  their  fathers  had  brought 
with  them  from  their  old  home  beyond  the  seas." 

As  soon  as  a  Western  society  develops  a  pure  Autocracy,  this  Autoc- 


>Ibid.,  pp.  20,  21. 
'  Ibid.,  pp.  14,  etseq. 
'  Ibid.,  p.  109. 
Mbid.,  p.  IS3- 
•Ibid.,  p.  IS4. 


Bk.  I  Introduction  555 

racy  begins  to  degenerate  and  undermine  its  own  power.  The  constitu- 
tional change  is  inevitable.  The  balance  in  the  resulting  society  will 
lean  toward  Aristocracy  or  Democracy,  and  these  two  forms  thus  be- 
come the  most  familiar  in  modern  political  organization.  There  are 
apparently  no  others.  The  literature  of  the  subject  is  large;  the  last 
half  century  being  especially  rich  in  the  number  of  its  contributions. 
This  literature,  as  well  as  the  forms  of  existing  society,  nearly  always 
partakes  of  the  nature  of  one  or  the  other  of  these  opposed  schools  of 
political  thought.  Perhaps  the  writings  of  Sir  Henry  Maine  and  Mr. 
Lecky  on  one  side,  and  those  of  Karl  Marx  and  Henry  George  on  another 
may  be  regarded  as  more  or  less  typical  of  each. 

No  comprehensive  view  of  the  subject  may  be  obtained,  however, 
without  extending  the  range  of  inquiry  over  a  wider  field  than  that  of 
the  immediate  foreground.  A  great  body  of  investigation  dealing  with 
political  theory  and  political  society  exists,  suggested  by  the  names  of 
Bryce,  Moriey,  Sir  Frederick  Pollock,  Grote,  Adam  Smith,  Mill,  The 
Fabian  Essayist,  Spencer,  Taine,  Turgot,  Rousseau,  de  Tocqueville, 
the  forerunners  of  the  French  Revolution,  Locke,  Hobbs,  Owen,  the 
German  and  Russian  political  writers  and,  in  fact,  practically  all  the 
political  and  jurisprudential  thinkers  from  Confucius,  Aristotle,  and 
Cicero  to  Mr.  Chamberlain,  might  be  named.  To  say  that  this  entire 
volume  of  thought  might  be  divided  exactly  into  two  distinct  portions 
would  doubtless  be  an  exaggeration;  yet  these  two  broad  classifications 
nearly  always  make  themselves  felt,  sooner  or  later,  in  some  form  or 
other.  The  division  always  presenting  itself  is  that  separating  nearly 
all  political  inquiry  into  two  schools;  the  schools  of  the  Few  and  the 
school  of  the  Many;  the  Aristocratic  and  Democratic  systems.  With 
the  elimination  of  a  transitory  Despotism,  it  seems  impossible  to  formu- 
late constitutional  thought  in  terms  not  embraced  in  these  two  cate- 
gories. The  final  repository  of  political  power  must  apparently  be  vested 
in  the  control  of  an  established  group,  or  derived  from  the  community 
through  the  action  of  the  vote.  If  the  first  is  adopted,  the  society  is 
Aristocratic,  if  the  second,  the  basis  of  a  Democracy  has  been  formed. 

Political  inquiry  thus  resolves  itself  into  a  comparison  of  Aristoc- 
racy and  Democracy.  The  best  way  to  study  a  political  system  is  in 
the  actual  working  of  a  society  under  it;  the  subject  will,  therefore,  be 
examined  in  a  brief  analysis  of  the  Aristocratic  and  Democratic  systems 
in  typical,  existing  societies. 


CHAPTER  II 

ARISTOCRACY 

IT  IS  not  easy  to  study  the  history  of  nations  under  aristocratic 
constitutions  and  long  remain  in  ignorance  of  the  dangers  of 
entrusting  administrative  power  to  the  Few.  The  formation 
of  class  interests  opposed  to  those  of  the  Many  is  inevitable.  The 
temptation  of  the  Few  to  place  their  interests  before  those  of  the 
majority  is  always  present,  and  experience  shows  not  often  resisted. 

Books  have  been  multiplied  indefinitely  to  prove  the  superiority  of 
aristocratic  political  society;  the  considerations  to  be  advanced  in  its 
favour  as  opposed  to  the  democratic  form  are  endless;  some  of  the 
broader  theoretical  positions  all  but  unanswerable;  even  Ruskin  and  Mr. 
Gladstone/  it  may  be  remembered,  styled  themselves  "inequalitarians." 
Yet,  when  the  attention  is  turned  from  these  generalizations  to  the 
study  of  Aristocracy  in  fact,  the  system  leaves  much  to  be  desired. 

There  is  but  one  basis  for  the  best  form  of  aristocratic  political  organi- 
zation: that  basis  is  territorial  possession.  The  ownership  of  land,  as 
the  foundation  of  political  and  legislative  influence,  is  by  far  the  best 
qualification  for  legislative  influence  in  any  aristocratic  system.  Prop- 
erty of  this  kind  not  only  frees  the  legislature  from  corrupting  external 
dangers,  brings  with  it  local  influence,  but  to  a  certain  extent  blends  the 
permanent  interests  of  the  owner  and  occupier  of  the  land;  that  is, 
the  interests  of  the  administrative  class  and  the  interests  of  the  society 
at  large.  On  account  then  of  the  limited  area  of  her  land,  and  the 
fact  that  few,  if  any,  modern  societies  have  developed  parliamentary 
institutions  of  a  more  liberal  type,  England  presents  the  most  favourably 
constituted  modem  example  of  aristocratic  society:  the  society  in 
which  the  application  of  aristocratic  principles  may  be  studied  under 
most  favourable  conditions. 

It  is  not  the  present  purpose  to  develop  even  the  briefest  review  of 
the  theoretical  considerations  to  be  advanced  either  for  or  against  the 
aristocratic  principle;  the  able  works  dealing  with  the  subject  need  no 
repetition.    The  attention,  on  the  contrary,  is  turned  for  a  moment  to  the 

'  Life  of  Gladstone,  Jahn  Morley. 

SS6 


Bk.  I  Aristocracy  557 

legislative  history  of  the  most  successful  aristocratic  society  of  modern 
times.  The  only  way  in  which  facts  may  be  studied  with  profit  is 
in  the  light  of  some  generalized  process  of  classification.  So,  too,  the 
only  method  of  judging  theory  is  to  test  its  capacity  for  being  brought  in 
contact  with  facts.  The  way  administrations  meet  conditions  show's 
the  results  of  the  principles  upon  which  the  adminstrative  system  of  the 
society  is  based.  It  seems  impossible  then,  for  reasons  given,  to  study 
the  workings  of  an  aristocratic  administration  under  conditions  more 
favourable  than  in  the  history  of  the  English  people.  This  history  is 
exhaustively  analyzed  for  a  period  of  six  hundred  years,  and  the 
results  presented  by  Professor  Thorold  Rogers  in  Work  and  Wages.  The 
advantages  of  the  aristocratic  system  here  becomes  clearly  evident 
—  for  the  administrative  Aristocracy.  As  the  attitude  of  a  legislative 
Assembly,  based  upon  the  aristocratic  principle,  is  studied,  toward  such 
questions  as  Acts  regulating  wages,  ^  the  debasement  of  the  coin  in 
which  the  wages  were  paid, 2  quarter  sessions  assessment,^  the  right 
of  the  peasantry  to  pasture  and  fuel,^  enclosures,^  the  confiscation 
of  the  funds  of  labour  guilds,^  Laws  of  parochial  settlements,'  dispro- 
portionate burden  of  taxes,^  Corn  Laws,  and  so  on,  these  advantages 
come  into  startling  relief;  they  seem,  however,  invariably,  in  favour  of 
the  administrative  oligarchy;  except  where  decisions  undo  the  evil 
effects  of  previous  decisions.     Says  Professor  Rogers:^ 

"We  have  been  able  to  trace  the  process  by  which  the  condition  of 
English  labour  had  been  continually  deteriorated  by  the  acts  of  govern- 
ment. It  was  first  impoverished  by  the  issue  of  base  money.  Next 
it  was  robbed  of  its  guild  capital  by  the  land  thieves  of  Edward's  re- 
gency. It  was  next  brought  in  contact  with  a  new  and  more  needy 
set  of  employers  —  the  sheep  masters  who  succeeded  the  monks.  It 
was  then  with  a  pretence,  and  perhaps  with  the  intention  of  kindness 
subjected  to  the  quarter  sessions  assessment,  mercilessly  used  in  the 
first  half  of  the  seventeenth  century,  the  agricultural  labourer  being 
stUl  further  impoverished  by  being  made  the  residuum  of  all  labour, 

1  Work  and  Wages,  p.  489. 

«  Ibid.,  p.  428. 

'  Ibid.,  p.  353. 

*  Ibid.,  p.  488. 

6  Ibid. 

»  Ibid.,  p.  349. 

'  Ibid.,  p.  433. 

'  Ibid.,  p.  SOS- 

»  Ibid.,  p.  488. 


558  Political  Theory  Pt.  V 

The  agricultural  labourer  was  then  further  mulcted  by  enclosures,  and 
the  extinction  of  those  immemorial  rights  of  pasture  and  fuel  which  he 
had  enjoyed  so  long.  The  poor  law  professed  to  find  him  work,  but  was 
so  administered  that  the  reduction  of  his  wages  to  a  bare  subsistence  be- 
came an  easy  process  and  an  economical  expedient.  When  the  monarchy 
was  restored,  his  employers,  who  fixed  his  wages  by  their  own  authority, 
relieved  their  own  estates  from  their  ancient  dues  at  the  expense  of  his 
poor  luxuries  by  the  excise,  tied  him  to  the  soil  by  the  Law  of  Settle- 
ment, and  starved  him  by  a  prohibitive  com  law." 

It  is  not  easy  to  add  to  this  interesting  summary  of  the  "practical" 
advantages  accruing  to  a  people  who  surrender  themselves  to  the  mercies 
of  an  aristocratic  administration.  A  few  others,  however,  have  been 
presented  in  the  words  of  Cobden.^ 

In  fact,  any  one  who  studies  the  action  of  the  average  aristocratic 
legislative  assembly,  in  Great  Britain  or  elsewhere,  may  be  led  to  the 
opinion  that  such  an  assembly  is  never  so  well  employed  as  when  en- 
gaged in  the  reversal  of  its  own  decisions. 

It  is  not  easy  to  estimate  the  amount  of  legislation  developed  by 
the  Corn  Laws.  All  this  mass  of  legislative  complication  grew  out 
of  ignorance  or  worse,  and  the  one  step  which  possessed  any  value 
in  the  long  chain  was  but  the  repeal  of  legislation  which  should 
never  have  been  enacted.  Says  Buckle^  in  speaking  of  the  repeal  of 
the  Corn  Laws:  "I  have  selected  this  instance  as  an  illustration  be- 
cause the  facts  connected  with  it  are  undisputed,  and,  indeed,  are  fresh 
in  the  memory  of  us  all.  For  it  was  not  concealed  at  the  time,  and 
posterity  ought  to  know,  that  this  great  measure,  which,  with  the  ex- 
ception of  the  Reform  Bill,  is  by  far  the  most  important  ever  passed  by 
a  British  Parliament,  was,  like  the  Reform  Bill,  extorted  from  the  legis- 
lature by  a  pressure  from  without;  that  it  was  conceded,  not  cheerfully, 
but  with  fear;  and  that  it  was  carried  by  statesmen  who  had  spent  their 
lives  in  opposing  what  they  now  suddenly  advocated.  Such  was  the 
history  of  these  events;  and  such  likewise  has  been  the  history  of  all 
those  improvements  which  are  important  enought  to  rank  as  epochs 
in  the  history  of  modem  legislation. 

"  Besides  this,  there  is  another  circumstance  worthy  the  attention  of 
those  writers  who  ascribe  a  large  part  of  European  civilization  to  meas- 
ures originated  by  European  governments.      This  is,  that  every  great 


»  Cf.,  p.  an. 

'  nistory  of  Civilization  in  England,  Vol.  I,  p.  3a4> 


Bk.  I  Aristocracy  559 

reform,  which  has  been  eflfected,  has  consisted,  not  in  doing  something 
new,  but  in  imdoing  something  old.  The  most  valuable  additions  made 
to  legislation  have  been  enactments  destructive  of  previous  legislation; 
and  the  best  laws  which  have  been  passed,  have  been  those  by  which  some 
former  laws  were  repealed.  In  the  case  just  mentioned,  of  the  corn 
laws,  all  that  was  done  was  to  repeal  the  old  laws,  and  leave  trade  to  its 
natural  freedom." 

The  actual  history  of  aristocratic  governments  shows,  as  Buckle 
points  out,  that  the  most  important  steps  taken  by  these  have  been  forced 
upon  them  from  without,  in  the  first  place;  and  in  the  second,  consist 
chiefly  in  the  repeal  of  their  own  legislation.  As  Lord  Acton  ^  well 
says  with  reference  to  the  action  of  corporate  bodies: 

"The  House  of  Lords  represents  one  great  interest  —  land.  A  body 
that  is  held  together  by  a  common  character  and  has  common  interests  is 
necessarily  disposed  to  defend  them.  Individuals  are  accessible  to 
motives  that  do  not  reach  multitudes,  and  may  be  on  their  guard  against 
themselves.  But  a  corporation,  according  to  a  profoimd  saying,  has 
neither  body  to  kick  nor  soul  to  save.  The  principle  of  self-interest 
is  sure  to  tell  upon  it.  The  House  of  Lords  feels  a  stronger  duty  toward 
its  eldest  sons  than  toward  the  masses  of  ignorant,  vulgar,  and  greedy 
people.  Therefore,  except  under  very  perceptible  pressure,  it  always 
resists  measures  aimed  at  doing  good  to  the  poor.  It  has  been  almost 
always  in  the  wrong  —  sometimes  from  prejudice  and  fear  and  miscal- 
culation, still  oftener  from  instinct  and  self-preservation.  Generally, 
it  does  only  a  temporary  injury,  and  that  is  its  plea  for  existence.  But 
the  injury  may  be  irreparable.  And  if  we  have  manifest  suffering, 
degradation  and  death  on  one  side,  and  the  risk  of  a  remodelled  senate 
on  the  other,  the  certain  evil  outweighs  the  contingent  danger.  For 
the  evil  that  we  apprehend  cannot  be  greater  than  the  evil  we  know." 

Again :2  "The  fact  is  that  education,  intelligence,  wealth  are  a 
security  against  certain  faults  of  conduct,  not  against  errors  of  policy. 
There  is  no  error  so  monstrous  that  it  fails  to  find  defenders  among  the 
ablest  men.  Imagine  a  congress  of  eminent  celebrities,  such  as  More, 
Bacon,  Grotius,  Pascal,  Cromwell,  Bossuet,  Montesqvdeu,  Jefferson, 
Napoleon,  Pitt,  etc.  The  result  would  be  an  Encyclopedia  of  Error. 
They  would  assert  Slavery,  Socialism,  Persecution,  Di\-ine  Right, 
Military  Despotism,  the  reign  of  force,  the  supremacy  of  the  executive 


>  Letters  to  Mary  Gladstone,  p.  206. 
•  Ibid.,  p.  19s  et  seq. 


560  Political  Theory  Pt.  V 

over  legislation  and  justice,  purchase  in  the  magistracy,  the  abolition 
of  credit,  the  limitation  of  laws  to  nineteen  years  and  so  forth.  If 
you  were  to  read  Walter  Scott's  Pamphlets,  Southey's  Colloquies, 
EUenborough's  Diary,  Wellington's  Despatches  —  distrust  of  the  select 
few,  of  the  chosen  leaders  of  the  community,  would  displace  the  dread 
of  the  masses.  The  danger  is  not  that  a  particular  class  is  unfit  to 
govern.  Every  class  is  unfit  to  govern.  The  law  of  liberty  tends  to 
abolish  the  reign  of  race  over  race,  of  faith  over  faith,  of  class  over 
class.  It  is  not  the  realisation  of  a  political  ideal:  it  is  the  discharge  of 
a  moral  obligation." 

Such  consideration  may  well  recall  the  words  of  Huxley^  in  expressing 
his  indebtedness  to  Comte  for  the  conviction  "that  the  organization  of 
society  upon  a  new  and  purely  scientific  basis  is  not  only  practicable, 
but  is  the  only  political  object  much  worth  fighting  for." 

These  passages  present  four  positions  with  reference  to  Aristocracy: 

1.  A  large  part  of  the  entire  process  of  aristocratic  legislation,  as  its 
history  is  presented  by  Professor  Rogers  in  relation  to  the  population 
imder  its  control  for  six  hundred  years,  could  be  summarized  in  one  word 
—  exploitation. 

2.  Buckle's  clearly  expressed  opinion,  which  history  supports,  that 
every  great  reform  effected  has  been  forced  upon  aristocratic  assemblies 
from  without  and  consists  in  little  but  the  repeal  of  their  own  enactments. 

3.  The  words  of  Lord  Acton,  that  "distrust  of  the  select  few,"  may 
well  "displace  the  dread  of  the  masses." 

4.  The  opinion  of  Huxley  that  a  scientific  reorganization  of  society 
is  the  "only  political  object  much  worth  fighting  for." 

The  most  thorough  arraignment  of  the  aristocratic  principle  need 
apparently  be  sought  no  farther  than  in  the  words  of  England's  best 
informed  and  ablest  sons.  As  Lord  Acton  says:  "The  danger  is  not 
that  a  particular  class  is  unfit  to  govern.    Every  class  is  unfit  to  govern.'* 

^.Lay  Sermons,  Addresses  and  Reviews,  p.  130. 


1 


CHAPTER  III 

DEMOCRACY 

A  RISTOCRACY   concentrates  political   power   in  the  hands  of 
/%       the  Few.     Democracy  embraces  the  widest  possible  surface 
f     %     of  the  social  organization  and  derives  power  from  the  Many. 

It  is  a  curious  comment  upon  the  action  of  the  human  intel- 
ligence to  compare  constitutional  literature  with  political  conditions: 
to  compare  the  Democracy  of  de  Tocqueville  and  the  French  writers 
of  the  eighteenth  century,  the  Democracy  of  Washington,  Hamilton, 
and  Jefferson;  the  Democracy  of  Lowells'  tribute  at  Birmingham,  with 
the  Democracy  that  walks  the  streets  and  casts  its  vote  to-day  in  London, 
Paris,  and  New  York. 

There  are  many  words  in  every  tongue  constantly  used,  either  without 
any  definite  conception  of  their  meaning  or  with  meanings  so  different 
that  they  may  be  applied  to  any  purpose.  Such  words  are  Liberty, 
Industrial  Freedom,  Natural  Rights,  Social  Justice,  and  such  a  word 
is  Democracy.  To  some  minds  Democracy  seems  to  present  a  golden 
inspiration  from  Heaven,  to  others  a  sinister  invention  of  the  Evil  One. 
The  attempt  to  discover  what  Democracy  really  is  might  lead  to  the 
definition  of  Sir  Henry  Maine  ;^  as  a  starting-point — namely,  that 
Democracy  is  a  "form  of  Government,"  just  as  is  Monarchy  or  Aristoc- 
racy, and  in  ultimate  analysis  little  but  an  "inverted  Monarchy." 
Demos  simply  votes  himself  into  the  throne  of  the  Caesars,  which  he 
occupies  at  times  with  questionable  grace,  to  say  nothing  of  intelligence. 
In  a  democratic  society,  Demos  occupies  the  citadel  of  power  and,  it 
may  well  be  asked,  what  are  his  administrative  qualifications?  In 
other  words,  what  is  the  concrete  thing.  Democracy? 

The  first  essential  in  responsible  administration  is  the  exercise  of 
intelligent  volition ;  without  this,  decision  becomes  but  brainless  inanity. 
But,  it  may  again  be  asked,  is  it  conceivably  possible  for  a  multitude 
to  exercise  intelligent  volition?  Has  any  multitude  in  history  ever 
shown  itself  for  any  time  anything  but  a  dough-like  mass,  kneaded  into 
any  desired  form  by  capitalist,  priest,  or  politician;   or  the  aimless 

•  Popular  Government,  p.  59. 

S6i 


'562  Political  Theory  Pt.  V 

inconsequences  of  which  these  follow  for  their  own  profit?  Is  it  pos- 
sible or  thinkable  for  a  multitude  to  conceive,  formulate,  and  direct  any 
policy  except  through  the  instrumentality  of  its  few  more  or  less  dominant 
intellects?  To  say  that  these  may  be  chosen  representatives  of  popular 
opinion,  is  beside  the  issue  in  the  application  of  democratic  theory  to 
concrete  questions.  Popular  opinion,  in  the  first  place,  when  brought 
in  contact  with  complicated  financial  and  administrative  problems, 
has  rarely  shown  itself  anything  but  a  confused  amalgam  of  ignorance 
and  error;  and  these  individuals,  in  the  second  place,  once  in  possession 
of  political  power,  became  invested  with  individual  and  class  interests, 
quite  as  much  as  the  most  rigidly  exclusive  Aristocracy;  and  this  with- 
out tradition  to  preserve,  permanent  or  territorial  position  to  uphold, 
or  any  responsibility  beyond  a  few  years  of  office. 

Vox  populi,  vox  dei,  says  the  old  Latin  proverb;  but  granting  vox 
populi  to  be  vox  dei,  important  questions  remain  with  reference  to  the 
meaning  of  vox  and  populus.  'Ts  the  voice  of  the  People  the  voice  which 
speaks  through  scrutin  d'arrondissetnent  or  through  scrutin  de  liste" 
pertinently  asks  Sir  Henry  Maine, ^  "by  Plebiscite  or  by  tumultuary 
assembly?  Is  it  a  sound  in  which  the  note  struck  by  minorities  is 
entirely  silent?  Is  the  People  which  speaks,  the  People  according  to 
household  suffrage,  or  the  People  according  to  universal  suffrage;  the 
People  with  all  the  women  excluded  from  it,  or  the  People,  men,  women, 
and  children  together,  assembling  casually  in  voluntary  meeting? 
None  of  these  questions  have  been  settled;  some  have  hardly  been  thought 
about.  In  reality,  the  devotee  of  Democracy  is  much  in  the  same  posi- 
tion as  the  Greeks  with  their  oracles.  All  agreed  that  the  voice  of 
an  oracle  was  the  voice  of  a  god;  but  everybody  allowed  that  when  he 
spoke  he  was  not  as  intelligible  as  might  be  desired,  and  nobody  was 
quite  sure  whether  it  was  safer  to  go  to  Delphi  or  to  Dodona." 

As  England  offers  the  most  favourable  ground  for  study  of  the  working 
Aristocracy,  the  American  Republic  presents  the  best  material  for  the 
study  of  Democracy  in  reality;  and  not  in  the  hypothetical  relations  of 
men's  minds.  The  real  history  of  Democracy  in  America,  it  may  be 
said,  begins  at  the  close  of  the  Civil  War.  Until  then  the  population 
had  an  unoccupied  land  area  at  its  disposition,  and  imder  such  condi- 
tions would  probably  have  spread  itself  over  the  country  equally  satis- 
factorily under  a  Chinese  Emperor  or  an  Indian  Rajah.  Until  a  popula- 
tion fills  its  land  area,  it  can  scarcely  be  said  to  come  in  contact  with  its 

^Popular  Government,  p.  183. 


Bk.  I  Democracy  563 

administration;  the  land  offering  relief  at  all  points.  Not  until  the 
land  is  absorbed  will  its  institutions  be  put  to  the  test,  as  Macaulay 
pointed  out  years  ago.  Duriing  the  latter  half  of  the  nineteenth  century, 
the  land  of  the  United  States  was  gradually  absorbed  and  the  conditions 
foreseen  by  Macaulay  began  to  make  their  appearance.  The  land  no 
longer  possessed  its  old  absorbing  power,  ^vith  the  result  that  the  in- 
creasing population  has  been  forced  to  flood  existing  centres. 

While  the  history  of  early  American  Democracy  presents  general 
well-being,  evenly  distributed  wealth,  and  relatively  little  political 
spoliation,  later  American  Democracy  presents  constantly  increasing 
slums  and  pauperism,  together  with  the  most  rapid  and  resistless  con- 
centration of  property  and  political  power  in  the  hands  of  a  few  individuals 
that  has  in  all  likelihood  ever  occurred  under  any  administration.  These 
conditions  have,  moreover,  been  produced  under  the  direction  of  a 
government  supposed  to  be  by  the  people  and  for  the  people. 

The  prevalent  conceptions  of  Democracy  and  constitutional  theory 
in  the  United  States  to-day  are  those  derived  from  eighteenth-century 
French  theorists  and  the  English  Whigs  under  George  III.     To  listen  to 
popular  theories  of  Government  and  consitutional  debates  in  the  legis- 
latures of  the  American  Republic  is  to  hear  archaic  echoes  of  a  dead 
century.     They   have   a  "quaint  paleozoic  quality,"   says  Professor 
Ford.  ^     "They  sound  like  echoes  from  a  remote  past."    It  is  of  interest, 
therefore,  to  watch  this   eighteenth- century  Democracy  at  work   in 
relation  to  twentieth- century  conditions.     Montesquieu  and  the  English 
Whigs,  speaking  through  the  Constitution  of  the  United  States,  have 
nothing  to  say  with  reference  to  the  public  service  franchise  as  a  factor 
in  Democracy,  they  are  silent  upon  the  connexion  between  an  indirect 
fiscal  system  and  imiversal  suffrage,  they  make  no  mention  of  the  nominat- 
ing organization  in  relation  to  incorporated  wealth,  a  protective  system, 
an  important  judicial  decision,  the  "boss,"  or  the  slum  vote.     These 
are  none  the  less  problems  of  existing  conditions  confronting  the  Adminis- 
tration of  the  United  States,  and  it  is  interesting  to  watch  the  elements 
which   eighteenth-century   Democracy  generates  in  order  to  express 
the  "will  of  the  people"  A\'ith  reference  to  such  problems. 

In  a  democratic  society  the  majority  of  the  male  population  is  usually 
supposed  to  wield  political  power.  This,  in  any  large  society,  can 
obviously  be  done  but  through  parliamentary  representation.  The 
"will  of  the  people"  ran  be  expressed  in  no  other  way.    The  selection 

•  The  Cause  of  Political  Corruption,  Scribners'  Magaiine,  January,  191 1,  p.  6a 


564  Political  Theory  Pt.  V 

of  this  representation  becomes,  therefore,  a  vital  element  in  the  political 
life  of  the  population;  the  real  source  of  power;  yet  eighteenth- century 
Democracy  ignores  this  important  crux  in  the  Democracy  of  fact. 
The  nominating  organization  is  a  piece  of  ultra-constitutional  machinery 
supplying  the  motive  power  necessary  to  make  the  constitution  move  at 
all.  It  is  like  a  modern  locomotive  dragging  about  a  train  of  antiquated 
stagecoaches. 

'Tf,"  says  Mr.  Godkin,i  «j  g^ifj  h^q^i  i]^q  reluctance  of  a  democracy 
to  vote  at  all,  or  to  vote  right,  was  not  foreseen  by  the  early  democratic 
advocates,  and  that  they  made  no  provision  for  it  in  their  system,  I 
should  not  be  very  far  wrong.  This  was  the  greatest  mistake  of  the 
theoretic  democrats.  They  never  foresaw  the  big  democracies.  The 
working  of  democracy  in  America  was  something  of  which  they  had  no 
conception.  They  did  not  anticipate  the  necessity  of  organizing  and 
directing  the  suffrage,  nor  of  the  intervention  of  the  boss  and  his  as- 
sistants.    .     .     . 

"Under  this  regime,  the  nominating  system,  of  which  no  theoretical 
writer  had  the  least  idea,  has  grown  into  a  piece  of  machinery  more  com- 
plicated than  the  government  itself.  The  man  who  manages  it,  who  says 
who  must  compose  the  body  which  selects  the  candidates — that  is,  who 
designates  the  delegates  to  the  nominating  convention  —  is  really  the 
most  powerful  man  in  the  community.  Every  one  who  wishes  to  enter 
public  life  bows  before  him.  No  one  who,  being  in  public  Ufe,  wishes 
to  rise  higher,  no  Representative  who  wishes  to  be  Senator,  nor  Governor 
who  wishes  to  be  President,  will  gainsay  him  or  quarrel  with  him.  Every- 
body but  the  President  in  a  second  term  is  at  his  beck.  For  similar 
reasons,  he  holds  the  legislators  in  his  power.  If  they  do  not  legislate 
as  he  pleases,  he  will  not  allow  them  to  come  back  to  the  legislature. 
He  has  to  be  consulted,  in  fact,  about  every  of&ce.  He  may  be  boss  of  a 
district,  a  city,  or  a  state.  The  larger  his  dominion  and  the  denser  its 
population,  the  more  powerful  he  is.  .  .  .  Any  person  who  to-day 
described  the  government,  say,  of  New  York  or  Pennsylvania,  or  any 
other  large  American  State  out  of  the  books,  would  give  no  real  idea  of 
it.  He  would  miss  the  real  source  of  power,  and  the  way  it  was  infused 
into  the  machinery.  If  there  be  anything  seriously  wrong  with  democ- 
racy in  America,  to-day,  it  lies  in  the  nominating  system,  yet  this 
attracts  comparatively  little  attention." 

Another  development  of  Democracy  is  noticed  by  nearly  all  observers. 

1  Problems  of  Modern  Democracy,  p.  289  et  seq. 


Bk.  I  Democracy  565 

This  is  the  neglect  of  political  life  by  wealth  and  education  on  one  side; 
and,  it  might  be  said,  the  suspicion  of  wealth  and  education  as  political 
factors  among  the  populace  on  another;  ''The  cult  of  incompetence," 
a  distinguished  observer^  calls  it  in  France.  This  is  doubtless  due  to 
many  causes;  among  them  might  be  mentioned,  however,  the  necessary 
control  of  the  politician  or  statesman  by  the  party  machinery  and  the 
fact  that  the  average  workingman  at  the  polls  may  believe  the  candidate 
most  nearly  approaching  his  own  financial  and  intellectual  level  will 
best  be  able  to  appreciate  his  political  needs.  Education,  therefore,  and 
wealth,  when  not  used  as  a  means  of  corruption,  seem  not  only  of  little 
advantage  in  the  public  life  of  a  Democracy,  but  may  even  become  a 
barrier  between  the  industrial  masses  and  men  of  means  and  distinction. 

This  seems  one  tendency  with  reference  to  conditions  generated  in  a 
Democracy.  Another  tendency,  however,  of  a  different  nature,  may  be 
traced  to  financial  and  corporate  influence.  This  tendency  results 
in  important  official  positions  such  as  those  of  Attorney-General,  Speaker, 
District  Attorney,  Treasurer,  Senator,  Judge,  Assessor,  and  so  forth 
being  filled  by  men  of  attainments  of  a  certain  kind,  usually  of  a  dis- 
tinctly legal  type:  these  men  being  chosen  because  of  their  ability  or 
political  influence  and  placed  in  these  specific  positions  for  specific 
purposes.  Through  these  officials  it  is  possible  for  the  men  who 
supply  the  party  contributions  to  the  "machine"  to  control  the  de- 
cisions of  a  Finance  Committee,  the  imposition  of  taxes,  the  disposition 
of  public  funds,  fiscal  decisions,  the  awarding  of  contracts,  subsidies, 
appropriations,  franchises,  prosecutions,  and  receiverships;  it  is  per- 
fectly possible  to  enact  legislation  in  such  a  way  that  legal  responsi- 
bility may  be  quashed  wherever  desired  and  the  control  of  public  funds 
and  fiduciary  institutions  placed  outside  the  pale  of  the  law;  while 
statutes  may,  of  course,  be  construed,  interpreted,  and  applied  as 
desired.2 

Thus  the  typical  legislative  and  official  body  of  Democracy  seems  to 
absorb  the  lesser  intellectual  lights,  on  one  side,  to  form  the  bulk  of  its 
material;  and,  on  another,  to  have  a  few  acute  and  conscious  legal  ele- 
ments thrust  into  it;  injected  as  it  were  from  without,  through  the  party 
machinery  into  certain  positions  for  certam  purposes.  The  legislation 
to  be  expected  from  an  administrative  system  constituted  in  this  way, 

*  Le  Culte  de  I  'Incompetence,  par  Emfle  Faguet. 

*  The  student  who  desires  to  study  Democracy  at  work  could  not  do  better  than  consult  Lincohi  Steffens' 
The  Shame  of  the  Cilies,  or  Hcndrick's  Story  oj  Lije  Insurance,  McClure's,  New  York.  All  necessary  daU 
and  endless  specific  cases  will  there  be  found. 


$66  Political  Theory  Pt.  V 

especially  with  reference  to  its  fiscal  and  financial  decisions,  may  not 
seem  of  a  very  inspiring  nature.  If  the  bulk  of  the  fiscal  and  financial 
decisions  of  the  United  States  is  examined,  some  ground  may  be  found 
for  the  opinion  of  the  Chairman  of  the  House  Committee  on  Banking 
and  Currency^  who  says  "that  there  is  scarcely  a  law  upon  our  statute 
books  affecting  our  finances  and  currency  which  is  clearly  and  purely 
the  result  of  economic  thought  and  such  as  would  have  passed  but  for 
necessity,  ignorance  or  political  cowardice." 

However,  it  may  seem  an  injustice  to  suppose  that  "necessity,  igno- 
rance, and  political  cowardice"  exhaust  the  resources  of  such  legislative 
and  administrative  material.  Says  Mr.  Godkin:^  "Every  government 
has  been  a  rich  man's  government.  It  is  only  in  some  of  the  smaller 
Swiss  cantons  that  departures  from  this  rule  have  been  made.  But, 
as  a  rule,  in  democratic  societies  of  our  day,  government  has  been  trans- 
ferred to  poor  men.  These  poor  men  find  themselves  in  possession  of 
very  great  power  over  rich  communities.  Through  the  taxing  power 
rich  corporations  and  rich  individuals  are  at  their  mercy.  They  are  not 
restrained  by  tradition;  they  are  often  stimulated  by  envy  or  other 
anti-social  passions." 

Thus  the  democratic  society,  studied  in  practice,  seems  to  develop 
three  characteristic  administrative  elements;  (i)  A  relatively  poor 
legislature  devoid  of  distinction,  social  or  intellectual;  (2)  a  party 
organization  in  complete  control  of  this  legislature,  through  its  control 
of  patronage  and  the  suffrage;  (3)  the  wealth  and  intelligence  of  the 
society  largely  outside  political  life.  The  practical  Democracy  seems 
to  be  a  poor  and  ignorant  legislature  controlled  by  party  machinery 
acting  as  a  screen  for  the  wealth  and  intelligence  of  the  community. 
What  can  be,  what  must  be,  the  results  of  such  a  system?  Need  it  be 
said  that  practically  the  important  administrative  activity  of  such  a 
society  will  resolve  itself  into  the  dictation  of  fiscal  decisions  by  organized 
wealth  and  the  blackmailing  of  the  organized  wealth  by  the  politicians? 
A  man  who  has  studied  it  at  first  hand  for  years  in  the  great  cities  of 
America  suggests  the  following  definition^  of  Democracy:  "the 
government  of  the  people,  by  the  rascals,  for  the  rich." 

Vox  populi,  vox  dei:  It  seems  that  in  ninety-nine  cases  in  a  hundred 
vox  populi  means  that  a  corporation   desires  a  protected  market  or  a 

'  Congressman   Charles  N.  Fowler,  Address  bejore  the  Illinois  Manufacturers'  Association,  Chicago, 
December  lo,  1907. 
*  Problems  of  Modern  Democracy,  p.  301. 
'  Lincoln  SteSens.     The  Shame  of  the  Cities,  p.  103. 


Bk.  I  Democracy  567 

legislative  enactment;  a  demagogue  seeks  popularity,  a  politician  sees 
an  opportunity  of  levying  legalized  blackmail;  a  financial  genius,  a 
method  of  creating  millions  out  of  nothing  by  capitalizing  a  tax  on  a 
vital  or  industrial  requirement:  an  issue  is  made,  "patriotism"  is  in- 
flamed, the  people  are  harangued  through  the  orators  and  the  news- 
papers, the  political  machinery  is  set  in  motion,  the  measure  is  passed, 
and  the  tongues  of  the  hydra-headed  Demos,  supposed  to  echo  the 
voice  of  the  Divinity,  have  given  utterance  to  their  wisdom. 

To  any  one  possessing  any  familiarity  with  what  the  words  "  franchise," 
"machine,"  "boss,"  "contract,"  "Protection,"  "taxation,"  "commer- 
cialized vice,"  mean,  in  actual  fact  in  a  democratic  society,  there  may 
seem  ample  reason  to  believe  that  Democracy,  in  its  practical  aspects, 
presents  all  the  elements  for  the  establishment  of  as  sodden  and  sordid 
an  abuse  of  political  power  as  has  ever  been  invented.  As  Huxley^ 
well  says:  "Up  to  this  time,  the  progress  of  such  republics  as  have  been 
established  in  the  world  has  not  been  such  as  to  lead  to  any  confident 
expectation  that  their  foundation  is  laid  on  a  suflSciently  secure  subsoil 
of  public  spirit,  morality,  and  intelligence.  On  the  contrary,  they 
exhibit  examples  of  personal  corruption  and  of  political  profligacy,  as 
fine  as  any  hotbed  of  despotism  has  ever  produced;  while  they  fail  in 
the  primary  duty  of  the  administration  of  justice,  as  none  but  an  effete 
despotism  has  ever  failed." 

The  mass  of  political  theory,  ancient  and  modern,  may  be  roughly 
separated  into  two  broad  divisions:  the  aristocratic  and  the  democratic. 
The  leading  writers  devoted  to  the  support  of  Democracy,  together  with 
an  examination  of  the  actual  results  produced  by  aristocratic  legis- 
lative assemblies,  suggest  the  following  definitions  of  Aristocracy: 

Aristocracy  —  a  form  of  government  in  which  a  few  individuals 
exploit  the  resources  of  a  society  for  their  own  benefit. 

That  body  of  political  thought  devoted  to  the  support  of  Aristocracy 
and  the  actual  conditions  generated  in  democratic  societies  present 
grounds  for  the  following  definition  of  Democracy: 

Democracy  —  a  form  of  government  in  which  a  few  individuals  ex- 
ploit the  resources  of  a  society  for  their  own  benefit. 

All  that  is  necessary  to  reach  these  conclusions  is  to  study  adminis- 
trative history  without  prejudice,  and  above  all  to  look  carefully  at 
the  facts. 

>  Hume,  p.  34. 


CHAPTER  IV 

NATURAL  SOCIETY 

"^  HE  study  of  political  society  in  the  light  of  the  evolutionary 
sciences,  mathematics,  and  economic  inquiry  suggests  the 
following  considerations: 
I.  Progress  can  apparently  be  continued  but  through  a 
selective  process  demanding  the  propagation  of  a  species  through  in- 
dividuals possessing  a  more  than  average  development.  This  process, 
consequently,  requires  the  death  or  failure  of  those  below  this  standard; 
that  is,  progress  demands  the  sacrifice  of  the  vital  interests  of  the  majority. 
In  a  physico-biological  sense,  therefore,  progressive  conditions  seem 
opposed  to  the  vital  interests  of  the  majority  of  the  individuals  concerned, 
and  consequently  lacking  in  any  rational  claim  to  their  support. 

It  may  be  said,  however,  that  human  progress  is  political,  not  physical, 
and  incapable  of  being  brought  within  the  scope  of  biological  generaliza- 
tions. Political  progress  necessarily  involves  the  aggression  of  one 
society  in  relation  to  other  societies.  Aggression  of  this  kind  neces- 
sarily involves  in  turn  the  aggression  of  the  progressive  society  in  rela- 
tion to  its  own  units.  This  aggression  must  be  based  fundamentally 
upon  the  subordination  of  the  interests  of  the  majority  of  individuals 
to  those  of  the  society  regarded  as  a  progressive  organization.  It 
is,  however,  impossible  to  form  any  rational  conception  of  a  society 
except  as  an  aggregate  of  individuals.  A  society  based  upon  this 
principle,  therefore,  subverts  the  interests  of  the  majority  of  its  individuals 
in  order  to  subvert  the  interests  of  another  majority  of  its  individuals. 
This  process  seems  devoid  of  a  rational  principle  at  the  beginning  and 
incapable  of  leading  to  anything  but  its  own  subversion  in  the  end. 
Progressive  political  systems,  in  that  they  attempt  the  essentially 
impossible,  that  is,  the  union  of  the  interests  of  the  individual  with 
those  of  a  progressive  aggregate,  must  apparently  always  sweep  round 
in  aimless  circles.  The  history  of  the  constitutional  development  and 
final  collapse  of  the  progressive  societies  of  the  past  supports  such  a 
position. 

It  may  be  said  again  that  progress  is  neither  biological  nor  political, 

568 


Bk.  I  Natural  Society  569 

but  psychological  and  intellectual;  and,  as  such  incapable  of  being 
expressed  in  either  biological  or  political  terms.  If  progress  of  this 
kind  is  subjected  to  a  process  of  analysis,  the  ideal  sequences  presented 
seem  chiefly  involved  in  a  series  of  rings  or  repetitions.  If  that  accumu- 
lation of  systematized  experience  called  science  is  regarded  as  embodying 
progress,  it  seems  that  science  shows,  with  whatever  certainty  it  pos- 
sesses, that  all  progress,  in  whatever  form  conceived,  must  inevitably 
be  lost  in  the  silent  chaos  of  the  future,  just  as  man's  history  is  lost  in 
the  silent  chaos  of  the  past.     Compare  Part  IV. 

II.  Indirect  taxation  is  a  system  of  raising  social  revenue  by  means 
of  levying  taxes  on  consumable  goods.  Taxes  of  this  nature,  in  order 
to  be  constant  and  productive,  must  be  assessed  upon  vital  and  indus- 
trial necessaries.  A  fiscal  system  based  upon  such  taxes,  as  are  all  exist- 
ing national  systems,  is  analogous  to  the  direct  periodic  assessment  of 
incomes  in  proportion  to  necessary  living  expenses.  Comparison  of  the 
necessary  living  expenses  of  an  income  of  £100  with  those  of  an  income 
of  £100,000  suggest  the  practical  results  of  this  process.  It  is  obvious 
that  a  vastly  larger  proportion  of  the  smaller  incomes  will  be  taxed  than 
of  the  larger.  It  may  thus  seem  that  the  taxation  of  incomes  in  pro- 
portion to  necessary  living  expenses  must  draw  the  smaller  incomes  of 
any  society  into  a  progressively  increasing  process  of  taxation;  while 
creating  at  the  same  time  a  progressively  increasing  process  of  exemption 
and  accvmiulation  on  the  side  of  the  larger  fortunes.  The  result  of 
this  process  can  but  create  a  constant  withdrawal  of  property  from  the 
hands  of  the  poor:  giving  to  those  who  have,  and  taking  from  those 
who  have  not,  even  the  little  they  possess.  Further  considerations  and 
statistical  illustrations  will  be  found  in  Parts  II  and  III. 

III.  The  best  economic  thought  suggests  that  the  suppression  of 
industry  is  disadvantageous.  Taxes  upon  consumption  suppress  the 
industries  adversely  affected.  If  the  industries  supported  by  taxation 
are  of  greater  value  than  untaxed  industry,  France,  England,  and  the 
United  States  should  cut  themselves  up  into  small  protected  areas^ 
each  taxing  the  other's  goods.  But  it  seems  obvious  that  however  small 
the  protected  areas  might  be,  they  could  always  be  cut  into  smaller,  a 
process  which,  carried  to  its  logical  conclusion,  would  lead  to  the  abolition 
of  trade  as  the  surest  means  of  creating  wealth.  These  considerations 
lead  to  the  opinion  that  the  unsuppressed  and  untaxed  consuming  power 
of  any  population  is  worth  more  in  annual  earning  capacity  than  the 
taxed  ajtid  suppressed  consuming  power.    Compare  Part  I. 


570  Political  Theory  Pt.  V 

IV.  The  existence  of  a  population  upon  any  given  area  of  the  earth's 
surface  causes  a  certain  value  to  attach  to  that  area  independently  of 
other  conditions.  This  value  is  created  by  the  whole  population,  ir- 
respective of  individual  initiative  or  effort.  This  value,  therefore, 
belongs  apparently  to  the  population,  as  a  population;  and  may  be  re- 
garded in  that  light  in  reference  to  the  needs  of  organized  society.  This 
value  is  measured  and  automatically  registered,  both  actually  and  rel- 
atively, by  the  annual  rental  value  of  unimproved  land.  The  annual 
value  of  its  unimproved  land,  as  represented  largely  in  franchises, 
mineral  privileges,  and  city  site  values,  forms  perhaps  the  most  natural 
and  economically  advantageous  basis  from  which  to  defray  the  annual 
requirements  of  society.  Further  consideration  and  statistical  analysis 
will  be  found  in  Parts  II  and  III. 

The  following  is  an  extract  from  Article  I,  Sections  7  and  8,  of  the 
Constitution  of  the  United  States:  "All  bills  for  raising  revenue  shall 
originate  in  the  House  of  Representatives;  but  the  Senate  may  propose 
or  concur  with  amendments.  .  .  .  The  Congress  shall  have  power 
to  lay  or  collect  taxes,  duties,  imposts,  and  excises." 

The  following  is  an  extract  from  the  Constitution  of  California, 
Article  XIII,  Section  6:  "The  power  of  taxation  shall  never  be  sur- 
rendered or  suspended  by  any  grant  or  contract  to  which  the  State  shall 
be  a  party." 

The  inhabitants  of  the  United  States  thus  live  under  two  distinct  fiscal 
systems;  these  may  be  called  Federal  and  Local  and  distinguished  as 
indirect  and  direct.  This  dual  fiscal  process  is  adopted  by  all  admin- 
istrations to-day,  the  distinction  between  an  indirect  Federal  system  and 
a  direct  Local  system  is  nearly  always  traceable. 

Reasons  have  been  presented  for  the  opinion  that  these  indirect 
Federal  systems  of  taxation  are  unnecessary  and  injurious.  But  in 
contemplating  the  possibility  of  the  substitution  of  direct  for  indirect 
methods,  the  question  arises;  how  would  such  a  transposition  affect 
the  Federal  administrations? 

Reasons,  estimates,  and  statistics  have  been  presented  suggesting 
that  the  administrative  expenses  of  the  United  States,  Federal  and  Local, 
could  have  been  met  during  their  past  history  with  less  waste  and  more 
even  distribution,  by  means  of  the  direct  assessment  of  socially  created 


Bk.  I  Natural  Society  571 

wealth.  Reasons  have  also  been  presented  for  the  opinion  that  such  a 
form  of  revenue,  in  allowing  the  consuming  powers  of  the  people  to  reach 
a  maximum,  would  create  a  greater  wealth-producing  capacity  than 
exists  to-day,  besides  relieving  the  people  of  an  unnecessary  burden. 

These  considerations  suggest  that  the  people  of  California,  or  of  any 
state  of  the  American  Union,  could  assess  their  socially  created  wealth 
directly,  meet  local  obligations,  and  at  the  same  time  contribute  their 
full  share  to  the  Federal  administration,  in  proportion  to  their  population, 
as  the  Constitution  provides,  with  less  expense  than  at  present. 

In  this  way  it  might  seem  possible  for  the  people  of  the  United  States 
to  transfer  their  indirect  Federal  system  to  a  direct  Local  system,  while 
observing  not  only  the  letter  but  the  spirit  of  their  Constitutions: 
Federal  and  Local. 

A  question  arises  with  reference  to  the  difference  in  the  functions  of  a 
Federal  administration  supported  by  direct  rather  than  by  indirect 
methods. 

An  examination  of  the  legislative  history  of  any  nation  shows  that  a 
great  proportion  of  such  history  is  traceable,  directly  or  indirectly, 
to  indirect  fiscal  methods  in  general;  shows,  in  fact,  that  an  overwhelming 
proportion  of  the  legislative  history  of  man  has  to  do  in  some  form  or 
other  -wdth  indirect  taxes  on  consumption.  If  these  indirect  burdens 
upon  the  vital  needs  of  a  people  are  useless,  all  this  mass  of  legislative 
accumulation  seems  proportionately  without  justification. 

A  portion  of  the  volume  of  statute  and  decision  which  has  poured 
from  every  legislative  Chamber  of  modem  times,  dealing  with  the  forced 
circulation  of  paper  money,  not  based  upon  bullion  equivalent,  might 
next  be  examined  in  the  light  of  the  following  passage.  * '  In  my  opinion , ' ' 
says  Jevons,^  "it  is  the  issue  of  paper  representative  notes,  accepted 
in  place  of  coin,  which  constitutes  an  arbitrary  interference  with  the 
natural  laws  governing  the  variations  of  a  purely  metallic  currency." 

If  the  opinion  of  Jevons  is  accepted,  this  entire  body  of  legislation 
may  seem  as  but  the  "arbitrary  interference  with  natural  laws,"  and  as 
such,  of  questionable  value. 

A  slightly  different  method  might  be  adopted.  Any  Act  may  be 
selected  in  the  statutes  of  any  nation.  This  Act  may,  in  many  cases, 
be  found  to  be  an  Act  to  amend  a  previous  Act.  If  so,  the  attention 
may  be  turned  to  the  Act  of  which  the  first  was  an  amendment  and  the 
process  continued.     Where  this  is  done,  one  legislative  Act  after  another 

'  Money  and  the  Mechanism  of  Exchange,  p.  342. 


572  Political  Theory  Pt.  V 

may  be  traced  to  previous  Acts  and  a  chain  developed  of  statute  and 
amendment,  every  link  of  which  is  derived  as  the  necessary  outcome  of 
some  original  legislative  Act.  The  attention  may  then  be  turned  from 
origins  to  results,  and  begin  at  the  same  point  as  before.  Every  legis- 
lative Act  may  lead  to  certain  legislative  amendments  or  results;  these 
results  taking  their  place  in  the  chain  and  becoming  legislative  causes 
in  their  turn.  Studies  of  this  nature  may  lead  to  the  conclusion  that 
the  bulk  of  human  legislation  is  a  self-perpetuating  process,  nearly  every 
Act  leading  necessarily  to  another;  each  becoming  both  cause  and  effect 
in  turn.  In  continuing  the  examination,  however,  and  in  tracing  specific 
chains,  these  chains  may  be  found  to  end  abruptly  at  a  given  point. 
Thus,  in  beginning  with  any  link  in  the  centre  of  a  legislative  chain, 
this  chain  may  be  traced,  link  by  link,  to  an  original  Act  in  which  it 
takes  its  rise;  in  following  the  chain  in  another  direction,  another  Act 
may  be  discovered  in  which  it  ends.  If  then  the  Act  in  which  the  chain 
arises  is  compared  with  that  in  which  it  ends,  food  for  reflection  may 
be  found;  if  the  last  Act  is  but  the  repeal  of  the  first.  It  may  seem,  in 
fact,  that  the  entire  chain  was  useless,  as  the  legislative  Assembly  itself 
had  pronoimced  it  to  be.  If  then  the  original  Act  is  studied  in  relation 
to  the  best  economic  and  political  thought,  and  seems  due  simply 
to  ignorance,  disregard  for  natural  economic  laws,  class  legislation, 
popular  hallucination,  arbitrary  dictation,  legislative  indifference  or 
corruption  the  entire  legislative  chain  may  seem  not  only  useless  but 
vicious. 

The  Corn  Laws  represent  one  of  these  long  chains  of  legislation  pour- 
ing for  years  from  the  English  Parliament,  creating  endless  misery  and 
endless  additional  legislation,  and  ceasing  only  when  the  original  Acts 
establishing  the  Laws  had  been  abolished.  The  process  is  everywhere 
traceable.  The  aimless  perpetuation  of  these  sequences  has  attracted 
the  attention  of  a  few  observers;  be  it  said,  however,  without  affecting 
either  the  faith  of  the  people  in  legislation  or  the  faith  of  legislatures  in 
their  own  decisions.  The  process  of  creating  political  evils  by  legislation, 
amending  the  original  Acts  until  complete  repeal  results,  continues 
without  possibility  apparently  of  achieving  any  result  or  of  ceasing  to 
perpetuate  itself.  *Tn  a  paper  read  to  the  Statistical  Society  in  May, 
1873,"  says  Mr.  Spencer^  "  Mr.  Janson,  vice-president  of  the  Law  Society, 
stated  that  from  the  Statute  of  Merton  (20  Henry  III.)  to  the  end  of 
1872,  there  had  been  passed  18,110  public  Acts;  of  which  he  estimated 

'  Social  Statics  and  Man  vs.  Slate,  p.  341. 


Bk.  I  Natural  Society  573 

that  four-fifths  had  been  wholly  or  partially  repealed.  He  also  stated 
that  the  number  of  public  Acts  repealed  wholly  or  in  part,  or  amended 
during  the  three  years  1870-1871-1872  had  been  3,532,  of  which  2,759 
had  been  totally  repealed." 

In  comment  upon  this  passage  Mr.  Spencer  says:  "To  see  whether 
this  state  of  repeal  has  continued,  I  have  referred  to  the  annually-issued 
volumes  of  "  The  Public  General  Statutes  "  for  the  last  three  sessions. 
Saying  nothing  of  the  numerous  amended  Acts,  the  result  is  that  in 
the  last  three  sessions  there  have  been  totally  repealed,  separately  or 
in  groups,  650  Acts,  belonging  to  the  present  reign,  besides  many  of 
preceding  reigns." 

But  it  must  be  remembered  that  before  these  Acts  are  repealed  they 
must  have  created  evils  sufficient  to  cause  widespread  misery  or  the 
influence  in  opposition  to  them  would  never  have  become  politically 
effective.  As  Mr.  Spencer  continues:  "We  forget  that  before  laws 
are  abolished  they  have  generally  been  inflicting  evils  more  or  less 
serious;  some  for  a  few  years,  some  for  tens  of  years,  some  for  centuries. 
Change  your  vague  idea  of  a  bad  law  into  a  definite  idea  of  it  as  an  agency 
operating  on  people's  lives,  and  you  see  that  it  means  so  much  of  pain, 
so  much  of  illness,  so  much  of  mortality."  Thus,  the  "  mother  of  Par- 
liaments" in  pronoimcing  by  her  own  decisions  about  four  fifths  of 
18,110  of  her  own  Acts  to  be  useless  suggests  reason  for  regarding  the 
remaining  one  fifth  as  legislation  yet  to  imdergo  the  apparently  inevit- 
able process  of  amendment  and  repeal.  As  Mr.  Spencer ^  adds:  "The 
postulate  that  men  are  rational  beings,  continually  leads  one  to  draw 
inferences  which  prove  to  be  extremely  wide  of  the  mark." 

These  rings  of  Acts,  amendments,  and  repeals  may  be  traced  through 
nearly  all  legislative  assemblies.  The  legislation  dealing  with  the 
French  assignats  is  a  notorious  example.  The  legislation  with  reference 
to  the  maximum  prices  of  the  same  period  presents  the  same  phenomena. 
The  history  of  the  Acts  of  the  Italian  Government  dealing  with  railway 
control  forms  another  such  ring  which  shifts  through  Act  after  Act,  until 
it  finds  itself  back  at  the  starting-point. 

It  is,  however,  in  the  United  States  that  the  most  instructive  examples 
of  modern  legislation  may  be  found.  The  Sherman  Silver  Act,  by 
endangering  the  Treasury  gold  reserves,  caused  imtold  loss  and  misery 
throughout  the  population  in  its  direct  and  indirect  effects  upon  the 
panic  of  1893.    Yet  this  Act  was  repealed  only  with  great  effort,  after 

*  Ibid.,  p.  365. 


574  Political  Theory  Pt.  V 

the  mischief  was  done,  in  face  of  stubborn  opposition  in  the  Senate,  and 
then  but  by  a  vote  of  43  to  32. ^ 

The  American  Navigation  Acts  are  another  example.  The  early 
American  shipping  and  carrying  trade  was  among  the  most  important 
in  the  world.  The  great  American  statesmen  have  destroyed  it  almost 
entirely. 

An  eminent  Scotch  builder  is  cited^  as  saying:  "For  the  last  thirty 
years  they  have  permitted  us  to  build,  and  largely  to  own,  nearly  all 
the  ships  that  the  ocean-carrying  trade  requires;  and  they  have  caused  a 
loss  to  their  people  of  about  £40,000,000  annually  of  freight  money  that 
they  might  have  appropriated  to  themselves." 

The  policy  adopted  by  the  legislatures  after  the  Civil  War,  of  selling 
the  right  to  tax  the  people  to  the  highest  bidder,  naturally  developed  a 
systematic  organization  of  the  purchasers  of  these  rights.  Thus,  a 
corporation  may  buy  the  right  of  imposing  taxes  from  the  legislatures 
and  then  buy  the  control  of  other  corporations  in  possession  of  such 
rights.  By  this  means  a  single  corporation  may  control  a  legislature,  an 
entire  chain  of  taxes  and  other  corporations,  and  then,  through  rates  and 
prices,  absorb  the  earnings  of  the  population  to  a  practically  unlimited 
extent.  Even  a  population  possessed  of  as  little  political  information  as 
that  of  the  American  Republic,  however,  will  gradually  gain  some  dim 
conception  of  the  process  and  the  idea  of  ''curbing"  the  trusts  appears. 
The  representatives  of  the  people  then  go  into  session  and  produce  the 
following  results  :2 

"Without  statutory  authority  a  corporation  could  not  invest  its  assets 
in  the  purchase  of  the  stock  of  other  like  corporations,  and  so  the  Legis- 
lature of  the  State  of  New  York  in  the  early  nineties  enacted  a  law  per- 
mitting this  to  be  done.  .  .  .  It  is  a  matter  worthy  of  notice,  and  a 
commentary  upon  legislation  in  these  days,  that  the  very  Legislature 
in  the  State  of  New  York,  which  gave  this  right  to  a  corporation  to  create 
a  monopoly  by  the  purchase  and  control  of  other  corporations  engaged 
in  like  business,  enacted  a  most  drastic  statute,  punishing  any  arrange- 
ment or  combination  whereby  a  monopoly  in  the  manufacture,  produc- 
tion or  sale  of  any  article  or  commodity  in  common  use  was  created,  and 
declaring  such  a  monopoly  a  misdemeanour,  punishable  by  a  fine  not  to 
exceed  $5,000,  or  imprisonment  for  not  longer  than  one  year,  or  both  said 


>  Financial  History  of  the  United  States,  Dewey,  p.  44s. 
^  «  The  Tarif  and  the  Trusts,  Franklin  Pierce,  p.  96. 
•Ibid.,  p.  so. 


Bk.  I  Natural  Society  575 

fine  and  imprisonment.  By  the  statute  allowing  a  corporation  to  pur- 
chase stocks  of  other  corporations  the  Legislature  marked  out  the 'way 
for  the  creation  of  a  monopoly  and  legalized  it,  and  then  turned  around 
and  at  the  same  session,  with  a  great  cry  against  monopolies,  passed  a 
statute  punishing  the  commission  of  that  for  which  it  had  already  pro- 
vided. Other  states  then  followed  the  example  of  New  York  and  enacted 
similar  statutes  allowing  the  creation  of  monopolies  and  then  providing 
for  their  punishment  by  vigorous  penal  laws." 

European  legislatures  enact  statutes,  amend  them  and  finally  repeal 
the  bulk  of  their  own  decisions;  this  process,  however,  of  dipping  up 
water  out  of  a  stream  and  pouring  it  back  through  a  sieve,  may  involve 
different  bodies  and  require  years  before  an  assembly  has  reversed  the 
bulk  of  its  own  decisions.  It  has  thus  in  all  likelihood,  remained  for  an 
American  assembly  to  achieve  this  final  legislative  triumph:  the  practical 
repudiation  of  its  own  Acts  by  a  single  body  in  a  single  session. 

Certain  students,^  however,  of  the  evolution  of  the  "practical"  Ameri- 
can legislative  intellect,  seem  at  no  loss  to  account  for  these  mental 
processes,  and  trace  shadows  of  the  corporate  bribe  on  one  side,  and  of 
the  blackmailers'  club  on  another,  flitting  as  it  were  across  this  luminous 
body  of  incorruptible  statemanship  "Yet,"  says  Mr.  Pierce,^  who  has 
made  a  careful  study  of  the  subject,  "  this  is  characteristic  of  American 
legislation.  We  legalize  conditions  out  of  which  an  evil  arises  and  then 
attempt  to  suppress  the  evil  by  penal  statutes." 

The  history  of  the  Sherman  Law  illustrates  this  process  on  a  national 
scale.  An  aimless  and  irresponsible  system  of  taxing  everything  the 
population  requires  in  its  daily  life  and  industry,  inevitably  throws  the 
control  of  interstate  trade  into  the  hands  of  the  men  in  control  of 
the  taxes  and  the  transportation  systems.  This  naturally  congests  the 
bulk  of  the  trade  of  the  country  in  certain  trust  controlled  channels,  and 
Congress  passes  a  statute  forbidding  agreements  in  restraint  of  trade. 
Litigation  follows,  in  order  to  discover  the  meaning  of  the  statute,  and 
the  question  is  finally  brought  up  to  the  Supreme  Court. 

The  Court  ruled,  in  the  trans-Missouri  freight  case,  (166  U.  S.,  290) 
that  all  restraint  of  trade,  whatever  its  nature,  is  illegal.  Congress, 
however,  through  the  fiscal  system  of  the  country,  has  legalized  restraint 
of  trade  on  a  national  scale,  and  the  restraint  continues.  More 
litigation  follows;  appeal  after  appeal  is  made  from  the  lower  Courts, 

'  With  reference  to  this  same  legislature.    Cf.  The  Story  of  Life  Insurance,  Burton  J.  Hendrick,  p.  225 
ct  seq. 
IL'  The  Tarif  and  the  Trusts,  p.  51- 


576  Political  Theory  Pt.  V 

until  the  Supreme  Court  finds  itself  again  face  to  face  with  the  Sherman 
Law.  Owing  to  the  great  accumulations  of  capital,  based  upon  tax- 
restrained  trade,  the  earlier  construction  of  the  statute  has  become 
dangerous  at  a  later  date.  The  Court  is  compelled  to  recognize  this 
fact;  shifts  its  position,  reverses  its  earlier  rulings,  and  recognizes  a 
"reasonable"  restraint. 

In  other  words,  it  refers  the  whole  question  back  again  to  individual 
judges;  and  the  thing  can  go  round  and  round  indefinitely,  until  the  law 
is  amended  or  repealed;  when  Congress  will  begin  to  reverse  itself 
instead  of  the  Court.  It  would  seem,  if  the  Sherman  Law  has  any 
basis  in  nature  or  reason,  that  the  entire  protective  system  of  trade 
restraint  should  be  brought  imder  it  and  abolished.  If,  on  the  other 
hand,  the  protective  system  has  any  basis  in  nature  or  reason,  a  ring 
of  protective  taxes  and  rates  should  be  built  around  every  state  in  the 
Union. 

The  characteristic  occupation  of  legislative  bodies  seems  to  be  the 
amendment  and  reversal  of  their  "own  decisions.  In  this  sense,  the 
legislative  intellect  acts  in  the  same  way  as  the  philosophic  intellect. 
The  builders  of  philosophic  systems  lay  certain  foundations  upon  which 
to  erect  their  structures.  They  then  begin  to  build  and  modify.  As 
years  go  on,  these  modifications  inevitably  develop  pure  philosophic 
Skepticism,  and  the  philosophers  have  destroyed  the  foundations  of 
their  own  buildings.  The  philosophers  then  repudiate  their  own  work, 
begin  again  and  repeat  the  process.  The  legislators  build  their  systems 
in  the  same  way.  They  adopt  certain  Acts  as  a  starting-point.  These 
Acts  develop  thousands  of  other  Acts  and  amendments.  The  legisla- 
tors at  last  find  themselves  face  to  face  with  the  original  Act.  They 
then  repeal  the  original  Act  and  begin  to  build  anew. 

A  study  of  the  indirect  tax  shows  it  to  be  one  of  the  mainsprings  of 
Federal  legislation,  and  of  a  large  part  of  local  legislation.  If  the  bodies 
producing  these  statutes,  seem  chiefly  occupied  in  amending  or  reversing 
their  own  decisions,  without  the  taxes  it  may  appear  that  the  opportunity 
for  legislative  decision,  amendment,  and  reversal  would  be  relatively 
slight.  An  administration,  without  the  power  of  legislating  upon  the 
indirect  tax,  could  not  be  brought  under  the  hypnotic  spell  of  the  pro- 
tectionist. It  would  be  free  from  the  mystic  rites  of  the  "balance  of 
trade"  and  the  "tariff- weapon."  Such  an  administration  would  be 
almost  incorruptible,  not  because  the  ofl5cial  fingers  might  not  ache  to 
reach  the  peoples'  pockets,  but  because  they  would  lack  the  power, 


Bk.  I  Natural  Society  577 

without  the  people  growing  more  or  less  conscious  of  what  they  were 
doing.  Nor  need  a  people,  living  under  such  an  administration,  be  any- 
less  effective  in  a  political  sense,  apparently,  than  any  other.  They  could 
protect  themselves  against  the  white  perils,  the  black  perils,  the  yellow 
perils,  and  all  the  perils  of  the  rainbow,  quite  as  well  mth  money  raised 
through  direct  channels,  as  with  money  raised  indirectly  from  the 
necessaries  of  life.  The  chief  difference  would  probably  be  that  the 
populations  would  begin  to  form  some  nebulous  idea  of  the  relation  of 
these  multi-coloured  "perils"  to  taxes,  army,  and  navy  contracts  and 
the  Stock  Exchange;  and,  if  they  began  to  do  this,  these  "perils"  might 
grow  paler.  The  question  is  suggested,  however.  What  would  be  the 
constitutional  form  of  a  political  organization  supported  by  the  direct 
contribution  of  socially  created  wealth? 

The  history  of  political  societies  is  the  history  of  certain  ideas; 
just  as  the  collective  history  of  the  bee  seems  dominated  by  the  idea  of 
gathering  honey.  The  story  of  the  formation,  modification,  and  abandon- 
ment of  these  ideas  forms  the  political  and  constitutional  history  of  man. 
In  the  first  stage  of  his  political  existence,  aggregates  are  formed,  dom- 
inated by  the  idea  which  gave  birth  to  the  early  Eastern  monarchies ; 
the  idea  of  irresponsible  centralized  power,  usually  regarded  as  necessary 
for  military  efficiency.  Greece  brings  new  political  conceptions  into 
existence.  She  formulated  the  ideas  of  Autocracies  modified  by  aris- 
tocratic and  democratic  bodies  and  the  first  conception  of  the  pure 
Democracy.  Nearly  everything  that  the  Hellenic  intellect  touched, 
it  proceeded  to  exhaust  in  an  analytical  sense.  The  history  of  Greece 
practically  exhausts  the  subject  of  constitutional  political  organization. 
She  repeated  all  the  phases  of  Autocracy,  Aristocracy,  and  Democ- 
racy in  their  purity,  and  then  began  to  combine  them  and  repeat 
the  combinations.  Man  as  a  "political  animal,"  has  never  done 
anything  else.  Rome  goes  through  all  the  phases  in  their  purity, 
corruptions  and  various  combinations  from  beginning  to  end.  England, 
after  different  combinations  of  the  three  forms  of  power,  goes  through 
the  pure  phases  with  their  culminations  and  then  begins  to  repeat  the 
combinations.  Within  little  over  a  century,  France  goes  through  the 
pure  phases  twice,  with  various  intervening  repetitions  and  combinations. 

In  every  one  of  these  shifting  forms  of  political  society,  man  is  dom- 
inated by  the  characteristic  idea  from  which  the  organization  takes  its 
rise.  He  conforms  to  its  characteristic  constitutional  system,  written 
or  unwritten;  autocratic,  aristocratic,  democratic,  or   these  combined 


578  Political  Theory  Pt.  V 

in  different  arrangements  of  constitutional  balances.  The  balance, 
however,  is  never  perfect:  no  system  of  constitutional  checks  has  been 
devised  making  it  impossible  for  one  power  to  subvert  another,  thus 
gain  a  controlling  influence,  develop  its  pure  form,  degenerate,  and  throw 
the  balance  into  the  hands  of  whatever  power  or  combination  could  seize 
it.  This  process,  it  seems,  is  endless  and  to  it  may  be  traced  the  series 
of  revolutions  and  reorganizations  through  which  human  political 
society  has  written  its  history  in  the  past.  This  history  of  constantly 
shifting  constitutional  rings,  extending  over  twenty-five  hundred  years 
suggests  the  question  whether  any  stable  constitution  is  conceivable, 
whether  any  system  of  political  organization  can  be  formulated,  check- 
ing this  apparently  inevitable  movement,  this  tendency  of  the  admin- 
istrative elements  of  society  to  consume  the  society  until  the  consumers 
are  consumed  and  the  process  begins  anew. 

Such  a  thing  may  well  seem  impossible,  but  if  such  possibility  exists, 
it  can  be  realized  but  by  taking  the  opportunity  of  exploiting  the  social 
resources  out  of  the  hands  of  any  administrative  power;  for  it  is  but 
through  the  control  of  social  resources  that  the  process  can  proceed. 

The  typical  political  organization  consists  of  an  Executive,  an  upper 
Chamber  and  a  representative  popular  Assembly;  these  are  the  elements 
of  constitutional  systems.  A  mixed  constitution  may  be  considered, 
formed  with  a  limited  Executive,  with  veto  subordinated  to  the  decisions 
of  a  strong  upper  Chamber.  With  these  powers  act  a  popular  repre- 
sentative Assembly,  whose  decisions  may  be  reversed  by  the  upper 
Chamber.  Had  Polybius  been  asked  to  pronounce  upon  such  a  con- 
stitution, he  would  probably  have  said  that  too  great  a  preponderance 
of  power  has  been  entrusted  to  the  upper  Chamber,  He  would  then 
probably  have  predicted  that  this  body  would  absorb  the  essential 
administrative  functions,  and  thus  change  the  formal  mixed  constitution 
into  a  pure  Aristocracy.  It  would  then  develop  the  oppressive  oligarchic 
form  and  finally  a  democratic  upheaval.  The  form  in  which  these 
constitutional  powers  might  appear  would  be  of  no  importance.  The 
Executive  might  be  an  hereditary  monarch,  a  popular  ministry,  an 
elective  president,  a  dual  elective  consulship,  as  in  Rome,  or  a  dual 
hereditary  kingship,  as  in  Sparta;  it  would  make  no  difference  —  the 
balance  of  power  would  lie  with  the  upper  Chamber,  and  whether  an 
hereditary  Aristocracy  or  an  elective  Senate,  the  outcome  would  be 
the  same  —  oppressive  oligarchy  and  a  democratic  upheaval. 

Another  mixed  constitution  may  be  considered.    A  limited  Execu- 


Bk.  1  Natural  Society  579 

live  is  subordinated  to  a  popular  Assembly.  The  upper  Chamber  may 
exercise  the  functions  of  revision,  amendment  or  delay,  but  lacks  the 
power  of  reversal.  The  balance  here  lies  with  the  popular  Assembly. 
In  accordance  with  what  seems  to  be  the  law  of  constitutional  evolution, 
this  body  will  begin  to  control  the  society.  A  pure  Democracy  will 
result.  The  Executive  may  be  a  King,  a  Sultan  or  a  President;  the 
upper  Chamber  may  represent  all  the  quarterings  of  the  college  of 
heraldry  combined  with  all  the  legal  and  judicial  wusdom  of  the  country. 
It  will  make  no  difference.  The  control  of  the  society  lies  with  the 
popular  body.  The  Executive  and  the  upper  Chamber  will  become 
figureheads.  The  popular  Assembly  will  split  into  political  parties  and 
factions  for  purposes  of  exploitation.  These  parties  and  factions  will 
organize  for  control  and  themselves  be  controlled  by  the  most  powerful 
capitalistic  influences  in  the  country.  Plutocracy,  disorganization,  mob 
rule,  civil  war,  and  a  dictator  are  the  usual  outcome.  The  problem 
then  before  the  constitution  builder  is  to  bring  the  balance  of  adminis- 
trative forces  into  a  stable  condition,  but  the  problem  has  never  been 
solved.  The  balance  may  remain  ostensibly  poised  for  generations, 
but  always  falls  over  on  one  side  or  another. 

The  political  history  of  man  revolves  about  one  subject  —  property. 
The  entire  administrative,  legislative,  and  political  activities  of  the 
human  race  may  probably  be  referred,  in  final  analysis,  to  the  movement 
of  matter.  Political  systems  are  essentially  but  systems  governing  the 
movement  of  matter  through  the  administrative  organizations.  Under  an 
Aristocracy,  all  the  matter  moves  toward  the  Aristocrats:  under  a  dem- 
ocratic system,  all  the  matter  moves  toward  the  Plutocrats;  that  is, 
toward  the  men  controlling  the  popular  assemblies.  A  study  of  polit- 
ical and  administrative  systems  reveals  a  fairly  constant  tendency, 
whatever  the  system  may  be,  for  the  property  of  the  population  to 
congest  in  the  hands  of  the  men  who  control  it.  It  is  obvious,  however, 
that  such  a  process  cannot  continue  indefinitely.  The  matter,  which 
flows  toward  the  Few,  must  of  necessity  flow  away  from  the  Many. 
As  the  matter  accumulates  in  their  hands,  the  Few  grow  fewer  and 
fewer,  but  the  Many  grow  more  and  more.  The  process  can  last  only 
as  long  as  the  Few  control  the  balance  of  power.  The  Few  grow  fewer 
and  fewer,  the  Many  grow  more  and  more.  The  Few  ever  shift  the 
matter  away  from  the  Many,  but  as  they  do  this,  they  shift  the  Power 
away  from  themselves.  The  Few  build  up  great  piles  of  matter,  the 
Many  build  up  great  piles  of  Power.    When  the  Few  have  built  up  all 


S8o  Political  Theory  Pt.  V 

the  matter,  the  Many  have  built  up  all  the  Power.  Then  the  Power 
will  fall  on  the  Matter,  and  the  Few  and  the  Many,  the  Matter  and 
the  Power,  the  Buildings  and  the  Builders,  will  all  fall  into  the  pit 
together. 

If  society  ever  wishes  to  stop  this  process  of  piling  up  the  social  wealth 
on  one  side,  until  it  drags  the  society  into  the  pit  on  another,  the  first 
thing  to  do  seems  to  be  to  take  it  out  of  the  power  of  the  social  organi- 
zation to  move  any  matter  in  any  direction  whatever,  except  to  give 
the  wealth  belonging  to  the  society  back  again  to  the  society.  The 
movement  of  matter,  in  the  administrative  sense,  is  largely  limited  to 
one  thing  —  the  control  of  the  taxing  powers  of  the  social  organization. 
Make  it  impossible  for  any  administrative  element  or  elements  to  control 
these  taxing  powers,  and  the  property  of  the  society  will  cease  flowing 
toward  the  control  of  the  taxes;  the  balance  will  no  longer  be  tossed 
this  way  or  that,  and  the  society  may  stop  churning  itself  round  in 
revolutionary  rings.  All  practical  constitutional  thought  should  begin 
with  the  control  of  the  taxing  power. 

Taxation,  as  at  present  understood,  consists  in  the  appropriation  of 
individual  property  by  the  social  organization  for  social  needs.  If 
this  process  but  results  in  the  accumulation  of  the  property  of  the 
Many  in  the  hands  of  the  Few,  would  it  seem  unreasonable  to  contem- 
plate checking  the  process  altogether?  Can  this  process  be  checked 
more  effectively  than  by  establishing,  as  a  constitutional  principle,  that 
no  power  to  tax  the  property  of  the  individual  shall  be  surrendered  to 
legislatures?  Can  the  withdrawal  of  property  from  the  Many  and  its 
piling  up  in  the  hands  of  the  Few  be  stopped  more  effectively  than  by 
the  refusal  of  the  individual  units  to  tax  each  other's  property  through 
the  social  organization?  In  other  words,  by  limiting  the  Constitutional 
functions  of  their  representative  bodies  to  respecting  the  property  rights 
of  others  as  they  would  have  their  own  respected. 

Under  a  Constitution,  however,  which  withdraws  from  the  social 
representation  all  power  to  tax  the  property  of  the  individual,  the  question 
of  revenue  must  be  met.  If  the  word  "Ccesar"  represents  the  aggre- 
gate of  all  individuals  involved,  that  is  the  society  as  a  whole,  past, 
present,  and  to  come;  and  the  wealth  which  this  aggregate  creates  in 
the  form  of  the  value  of  the  land  upon  which  it  exists,  is  separated 
from  wealth  created  by  the  individual,  could  this  question  be  more 
effectively  answered  than  in  the  words:  "Give  unto  Caesar  that 
which  is  Caesar's." 


Bk.  I  Natural  Society  581 

"In  order  to  find  out  what  is  the  best  State,"  says  Aristotle,^  "we 
should  first  find  out  what  is  the  best  life.  Until  this  is  established  the 
best  form  of  political  organization  cannot  be  discovered,  for  those  who 
lead  the  best  life  will  naturally  live  under  the  best  administration.  We 
should  begin,  therefore,  by  seeking  the  best  life,  and  then,  whether  that 
life  is  not  the  best  for  both  the  indi\idual  and  the  social  aggregate." 
Can  a  man  lead  a  better  life  than  in  refusing  to  support  a  political  aggre- 
gate whose  actions  fall,  however  slightly,  below  the  standard  which  his 
own  self-respect  establishes  as  the  best  for  himself?  Can  this  position 
be  formulated  more  clearly  than  in  giving  to  God  that  which  is  God's? 

Can  these  three  fundamental  elements,  then,  of  a  natural  constitution; 
that  is,  one  neither  aristocratic  nor  democratic,  but  which  rests  upon 
individual  human  freedom,  be  better  expressed  than  in  the  words:  Do 
unto  others  as  you  would  they  should  do  unto  you:  Give  unto  Caesar 
that  which  is  Caesar's  and  unto  God  that  which  is  God's? 

>  Politics,  H.  I,  1323  a  14. 


Book  II 
POLITICAL    PRACTICE 

CHAPTER  I 

THE   INDIRECT   TAX   IN   PRACTICE 

A  CITY  man  once  paid  a  visit  to  a  farmer  friend  in  the  country. 
The  farm  lay  on  a  stream  flowing  into  the  river  which  supplied 
the  city  with  water.  The  barns  lay  in  a  hollow  and  drained 
into  the  stream.  The  city  man  explained  to  the  farmer 
that  such  conditions  were  a  mistake;  for,  in  allowing  them,  the  farmer 
was  not  only  polluting  the  water  used  by  the  city,  but  wasting  valuable 
fertilizing  material.  The  farmer  took  a  piece  of  paper  and  showed  how, 
owing  to  the  situation  of  the  barns,  the  preservation  of  the  drainage  would 
cost  so  much,  and  how  it  would  cost  so  much  more  to  raise  and  distribute 
it  on  the  fields.  He  then  showed  the  probable  annual  yield  of  the  process. 
It  cost  four  or  five  times  as  much  as  it  was  worth.  He  did  not  have  the 
money  to  spend  in  that  kind  of  farming.  However,  as  he  was  a  reason- 
able man,  as  well  as  a  practical  farmer,  he  recognized  the  justice  of  the 
city  man's  observations  and  offered  to  adopt  his  suggestions  in  every  par- 
ticular, if  the  city  man  would  pay  the  bills.  The  city  man  grew  interested 
in  other  topics  of  conversation  and  never  mentioned  drainage  again. 

This  fable  teaches  the  difference  between  a  rational  sequence  of  ideas 
in  a  man's  mind,  and  external  conditions  with  which  such  ideas  may 
have  as  much  actual  connexion  as  with  the  moons  of  Jupiter.  In 
the  instance  cited,  the  city  man  was  perfectly  right.  The  farmer  was 
perfectly  right.  One  was  governed  by  generalized  abstractions,  the 
other  by  concrete  conditions.  There  was  no  possibility  of  bringing  them 
together.  The  drainage  is  still  wasted,  the  river  still  polluted.  There 
not  only  was  no  solution  to  the  diflSculty  but  there  probably  never  will  be. 

The  difference  between  political  theory  and  political  practice  is 
marked.  Up  to  the  present  fiscal  systems  have  been  studied  from  the 
viewpoint  of  the  political  and  economic  theorist;  in  the  library,  as  it 

582 


Bk.  II  The  Indirect  Tax  in  Practice  583 

were,  under  the  lamplight.  The  subject  may  now  be  examined  out  of 
doors  in  the  sunlight.  Light  often  makes  great  differences  in  form, 
throwing  high-lights  into  shadow  and  bringing  depths  unnoticed  into 
salient  relief.  The  attention  may  here  be  turned  to  an  existing  fiscal 
system,  with  its  steam  up,  so  to  speak,  and  the  piston-rods  at  work 
in  the  cylinders.  The  system  of  the  United  States  is  selected,  as  the 
indirect  tax  may  there  be  studied  in  its  maturity;  considerations,  how- 
ever, applying  to  the  indirect  tax  of  the  American  Republic,  apply 
with  local  modifications  to  the  indirect  tax  wherever  found.  The 
taxes  of  the  United  States  may  be  roughly  classified  as  follows: 

1.  The  fundamental  tax  imposed  by  all  societies  upon  their  members; 
this  tax  is  economic  rent.  It  is  paid  partly  to  the  State  and  partly  to  the 
ground  landlord.  The  practical  effects  of  this  tax,  as  assessed  and  col- 
lected to-day,  is  to  inflate  all  securities  based  upon  land  values:  such  as 
franchises,  mineral  privileges,  city  sites,  and  so  forth. 

2.  Increased  prices,  due  to  excise  and  revenue  duties.  These  taxes 
are  paid  partly  to  the  State  and  partly  to  the  interests  affected.  These 
taxes  inflate  all  incorporated  earning  powers  and  securities  involved. 

3.  Protective  taxes.  None  of  these  taxes  is  ever  paid  to  the  State. 
Their  effect  is  to  inflate  every  stock  and  bond  certificate  of  the  protected 
industries. 

4.  Tariff-weapon,  or  diplomatic,  taxes.  These  taxes  are  generally 
added  to  existing  protective  or  revenue  schedules.  They  are  in  most 
cases  paid  to  the  protected  or  vested  interests  involved.  Their  effect 
is  to  inflate  securities  of  this  nature,  directly  and  indirectly,  and  steady 
such  values  generally. 

5.  Taxes  in  the  form  of  party  contributions  and  funds  subscribed 
for  purposes  of  legislative  manipulation.  These  are  paid  into  the  pockets 
of  politicians,  high  and  low.  Their  effects  may  be  to  protect  and  shelter 
financial  interests,  to  steady  the  market  on  the  Exchanges,  assist  in 
securing  the  solvency  of  the  great  institutions,  and  in  keeping  the  indus- 
trial heart  of  the  people  beating. 

6.  The  revenue  itself  might  be  added  to  this  list,  although  almost 
a  negligible  quantity  in  really  practical  politics. 

Viewed  from  an  administrative  chair,  or  that  of  a  bank  president 
with  millions  of  other  men's  money  in  his  charge,  there  is  nothing  to 
which  the  action  of  these  taxes  might  better  be  compared  than  the 
muscular  contraction  and  expansions  of  the  heart,  as  affecting  the 
circulation  of  the  blood.     Every  one  of  these  taxes  helps  in  some  way 


584 '  Political  Practice  Pt.  V 

or  other,  and  often  in  many  ways  combined,  to  aid  the  circulation;  to 
contract  or  expand  the  industrial  heart  of  the  nation  and  send  the  blood 
that  much  farther  with  increased  regularity. 

Smith  and  Mill  present  arguments  for  believing  many  of  these  taxes 
to  be  based  upon  false  economic  principles.  The  practical  man  knows, 
however,  that  these  arguments  may  be  regarded  as  so  much  waste  paper, 
so  far  as  having  any  actual  application  to  existing  conditions  is  concerned. 
No  one  is  forced  to  meet  arguments,  and  the  practical  man  is  forced  to 
meet  conditions  as  they  develop.  These  taxes  create  conditions,  are 
in  fact,  themselves  conditions,  and  needless  to  say  the  conditions,  and 
not  the  arguments,  are  in  control.  That  vast,  impersonal  force  set 
in  motion  by  an  entire  people,  the  force  represented  by  the  various 
fiscal  processes  of  a  great  population  is,  perhaps,  the  most  important 
single  economic  factor  in  any  way  under  human  control.  This  force,  in 
its  organized  activities,  represents  an  irresistible  engine  in  its  action 
upon  the  economic  life  of  the  nation  and  the  distribution  of  its  wealth. 
Where  this  engine  is  permitted  to  affect  natural  values  in  the  form 
of  prices,  franchises,  securities,  and  so  on,  the  individuals  who  control 
or  influence  it  find  financial  opportunities  at  their  disposition  which 
there  is  no  reason  to  avoid,  and  which  it  may  be  impossible  to  avoid,  where 
such  conditions  exist.  If,  for  instance,  it  becomes  possible  to  employ 
capital  under  the  influence  of  a  protective  tax,  not  only  no  reason 
exists  for  not  doing  so,  but  conditions  may  make  it  impossible  to 
employ  the  capital  in  any  other  way.  If  a  bank  director  or  financier 
finds  occasion  for  the  investment  of  funds  in  his  charge,  or  for  the 
development  of  industry,  rendered  possible  by  a  fiscal  system;  in  taking 
advantage  of  such  an  opportunity,  he  but  exercises  the  legitimate 
functions  of  his  profession.  If  he  neglects  it,  he  proves  false  to  his 
duties  as  trustee,  representative  of  corporate  funds  or  guardian  of 
savings  in  his  care.  The  members  of  an  administrative  system,  the 
directors  of  fiduciary  institutions,  the  representatives  of  corporate 
wealth  in  any  form  owe  a  direct  responsibility  to  the  people  and  to 
the  owners  of  the  funds  entrusted  to  them.  This  responsibility  can 
have  but  one  significance  —  to  make  the  most  advantageous  use  of  the 
funds  possible  as  either  administrator  or  trustee. 

Under  every  indirect  system,  the  man  of  affairs,  as  administrator  or 
financier,  is  acted  upon  by  two  forces:  his  responsibility  to  the  people  at 
large,  as  represented  in  their  industrial  life;  and  opportunities  of  making 
the  most  productive  use  of  that  responsibility  through  his  influence,  direct 


Bk.  II  The  Indirect  Tax  in  Practice  585 

or  indirect,  upon  legislation.  If  it  is  possible  for  him  to  increase  the 
earnings  or  wealth  of  the  industries  and  institutions  he  represents,  for 
what,  it  may  be  asked,  is  the  legislature  empowered  except  to  enact 
measures  for  such  a  purpose? 

The  development  of  this  train  of  thought  will  suggest  the  practical 
side  of  indirect  financiering.  As  has  been  said,  the  fiscal  poUcy  of  a 
nation  is  the  most  important  economic  and  financial  factor  under  the 
nation's  control.  When  such  a  policy  is  allowed  to  affect  values  in 
any  way,  artificial  values  will  necessarily  be  created.  Every  indirect 
tax,  whatever  its  nature,  creates  artificial  values,  whether  protected 
or  not.  An  excise  duty  creates  a  vested  interest  of  some  sort,  if  only  in 
its  exemption  of  socially  created  wealth  from  just  fiscal  burdens.  In 
this  way,  every  indirect  tax  will  bring  into  existence  an  artificial  earning 
power,  which,  whether  actively  listed  on  the  Exchanges  or  not,  will 
enter  into  all  the  ramifications  of  the  financial  life  of  the  nation.  Great 
protected  interest  will,  like  a  wedge,  sink  deep  into  the  people's  industrial 
heart.  Exempt  or  but  partly  taxed  franchises,  mineral  wealth,  and  so 
forth,  will  cut  like  a  knife  under  the  foundations  of  the  entire  financial 
life  of  the  country  through  the  investments  of  the  fiduciary  institutions. 
Values  created  by  indirect  fiscal  system  dependent  upon  these,  will 
have  been  sold  to  the  masses  of  the  people  in  a  thousand  ways  of  which 
they  have  no  knowledge. 

The  indirect  tax  in  theory  is  a  useless  and  dangerous  burden;  in 
practice,  it  is  a  very  different  thing.  In  practical  finance  it  acts  as  a 
force-pump  keeping  the  nation  alive.  One  goes  round  a  ring  one's 
self  at  this  juncture  and  shakes  hands  with  Mr.  Chamberlain  on  the 
other  side  of  the  fence,  as  it  were. 

Put  any  man  of  practical  common  sense  in  a  position  in  which  he 
must  provide  funds  to  meet  the  never-ending  payrolls  of  thousands  of 
workmen,  and  the  demands  of  ever-renewing,  ever-maturing  financial 
obligations;  put  him  in  control  of  a  great  bank  or  institution  of  trust, 
conscious  of  its  responsibility  to  its  depositors,  and  let  him  understand 
what  it  means  to  have  the  value  of  millions  of  securities,  for  which  he 
is  personally  responsible,  endangered  for  an  instant;  let  him  know  what 
it  means  to  feel  the  industrial  and  financial  pulse  of  a  great  people 
beneath  his  touch;  feel  the  heart  throbs  of  a  nation,  and  know  what  the 
magic  word  "credit"  means  in  practical  politics  and  practical  finance; 
and  there  will  be  little  question  whether  he  is  a  protectionist  or  free 
trader.     Give  him  the  responsible  administrative  control  of  a  great 


586  Political  Practice  Pt.  V 

industry,  dependent  directly  or  indirectly  upon  fiscal  schedules  and 
representing  the  interests  of  thousands  of  workers  and  investors;  put 
him  in  the  presidential  chair  of  a  great  railway  or  corporation,  with 
the  ever-renewing,  ever-recurring  obligations  of  bonded  indebtedness, 
repair  and  extensions  to  meet  or  go  into  the  hands  of  a  receiver;  give 
him  a  responsible  position  on  the  financial  committee  of  a  legislative 
assembly  with  vast  interests  to  study,  consider,  and  preserve;  make  him 
the  chairman  of  a  board  elected  to  discuss  tariff  issues  or  indirect  schedxiles, 
and  let  him  realize  the  importance  of  his  decisions,  be  conscious  of  his 
responsibility  to  millions  of  human  beings,  rich  and  poor  alike,  and  he 
will  become  but  little  interested  in  the  relative  theoretical  merits  of 
Protection  and  Free  Trade.  He  would  probably  pat  the  free  trader 
on  the  head,  tell  him  he,  too,  used  to  be  a  free  trader  in  his  youth,  but 
that  he  had  no  time  to  talk  about  it  just  then.  Take  the  most  so-called 
"practical"  of  socialists,  the  most  rational  of  free  traders  or  single 
taxers,  the  most  philosophic  of  anarchists,  explain  the  real  financial 
situation  to  them;  take  any  one  of  them  or  take  them  altogether,  let 
them  understand  what  they  are  doing,  and  put  them  in  the  position  of 
men  who  have  to  act,  and  not  talk;  and  they  can  be  turned  into  high- 
tariff,  Chinese-wall  protectionists  in  a  flash  of  light,  if  they  have  a  gleam 
of  practical  intelligence.  This  is  not  the  logic  of  economics,  nor  of 
political  theory;  this  is  the  resistless  force  of  conditions.  The  practical 
man  is  not  interested  in  theories.  These  taxes  may  or  may  not  be  theo- 
retically advantageous;  should,  or  should  not,  have  been  imposed. 
Practical  politics  have  nothing  to  do  with  these  questions.  These 
taxes  exist  as  financial  factors,  and  are  as  vital  a  necessity  to 
the  nation  as  food  and  drink  to  a  man;  and  that  is  the  end  of  it. 
All  the  theories  ever  conceived  cannot  change  these  conditions. 
The  practical  man  deals  with  the  thing  as  it  is,  he  cannot 
help  himself;  he  is  forced  to  deal  with  the  thing  as  it  is,  and  theories 
do  not  meet  it. 

This  is  real  Protection ;  this  Protection  requires  no  protective  theories 
for  its  support;  no  free  trade  theories  can  affect  it.  The  solvency  of 
every  fiduciary  institution  in  a  country  is  directly  dependent  upon  in- 
direct fiscal  schedules,  because  these  schedules  represent  industrial  values 
against  which  the  savings  of  the  people  have  been  lent,  and  in  which 
these  savings  have  been  invested  by  the  institutions  of  trust.  No  intel- 
ligent man,  therefore,  in  responsible  administrative  control,  will  ever 
allow  these  schedules  to  be  dangerously  affected,  he  well  knows  that, 


Bk.  II  The  Indirect  Tax  in  Practice  587 

through  the  great  institutions,  they  represent  Hterally  the  life-blood  of 
the  nation. 

These  are  the  facts.  This  is  the  thing  as  it  is,  and  there  are  but  two 
things  that  can  face  the  thing  as  it  is  in  practical  politics;  the  practical 
politician  has  but  two  tools  with  which  to  work :  He  works  with  money 
or  cold  steel,  or  he  works  not  at  all;  and  the  practical  man  will  use  these 
two  things  to  keep  the  indirect  tax  in  force.  This  is  the  reason  why  in 
practical  politics  the  indirect  tax  stops  where  it  is;  the  reason  why 
economic  theories  drift  round  it  like  summer  breezes  round  the  turrets 
of  a  man-o'-war.  The  reason  is,  that  the  money  and  the  guns  of  the 
people  are  behind  it. 


CHAPTER  II 

PRACTICAL  SOCIALISM 

SINCE  the  days  of  Marx,  Socialism  has  had  a  more  or  less 
definite  system  in  which  to  unite  its  adherents.  The  system 
of  Marx  has  been  developed  and  simplified.  SociaHsm  is 
largely  the  politics  of  labour  unions  where  these  fall  away  from 
existing  parties.  Many  of  the  upper  and  educated  classes  are  declared 
Socialists.  Socialism  is  thus  becoming  a  definite  self-conscious  system 
with  intelligent  leaders  and  popular  support. 

The  level  of  the  mass  of  the  unemployed  seems  to  be  gradually  rising 
in  the  streets  of  London,  Paris,  Berlin,  and  New  York;  the  areas  of  poverty 
and  pauperism  slowly  spreading  over  the  great  centres  of  population. 
The  number  of  Socialist  votes  is  increasing  and  with  them  the  number  of 
Socialist  representatives  returned  to  legislative  bodies.  Such  conditions 
may  lead  to  inquiry  with  reference  to  the  effects  they  are  likely  to  have 
upon  the  societies  in  which  they  obtain.  The  mass  of  the  unemployed 
might  be  regarded  as  the  mercury  in  the  political  thermometers; 
the  more  the  bulb  of  poverty  and  unemployed  is  expanded  in  any 
society,  the  higher  will  the  unemployed  mercury  shoot  up  in  the 
social  tube.  What  heats  the  bulb  below?  What  makes  the  mercury 
go  up? 

Every  indirect  tax  on  a  vital  necessary  can  act  apparently  in  but  one 
way  with  reference  to  the  distribution  of  wealth;  it  can  but  take  the  food 
out  of  the  poor  man's  mouth  or  the  clothes  off  his  back  and  pile  them  up 
in  the  form  of  industrial  securities  in  the  rich  man's  pockets.  The  reason 
is  that  the  smaller  a  man's  means,  the  greater  must  be  the  relative 
proportion  spent  upon  vital  needs,  and,  consequently,  the  greater  will  be 
the  relative  proportion  absorbed  by  taxation.  This  process  carried  on 
for  generations  throughout  a  society  will  draw  an  increasing  proportion 
of  the  population  into  the  quicksands  of  poverty  and  force  the  unemployed 
mercury  so  much  higher  in  the  populous  thermometers.  But  where  the 
consuming  power  of  the  bulk  of  the  population  is  checked  in  this  way 
industrial  development  will  be  proportionately  suppressed.  As  popu- 
lation increases  these  taxed  and  suppressed  powers  of  consumption  will 

S88 


Bk.  II  Practical  Socialism  589 

be  unable  to  support  the  increase  proportionately  and  the  unemployed 
mercury  shoots  up  still  higher. 

This  is  what  the  indirect  tax  does  on  one  side;  on  another  side,  it 
does  something  very  different.  It  not  only  employs  a  mass  of  arti- 
fically  distributed  labour,  inflates  untold  millions  of  security  values, 
but  acts  as  the  mainspring  of  the  industrial  heart  action  of  a  nation, 
through  its  institutions  of  trust.  No  man  in  administrative  control  will 
ever  dare  touch  it  for  this  reason;  cannot  touch  it  in  fact.  If  he  did, 
he  would  but  create  greater  evil  than  those  in  existence.  Thus  the 
indirect  tax  will  be  held  where  it  is  as  long  as  the  men  in  power  can  do 
it,  they  cannot  help  themselves,  the  conditions  will  control  them;  and  as 
long  as  they  hold  it  where  it  is,  the  mercury  will  rise  in  the  great  cities 
as  steadily  and  resistibly  as  the  tides.  The  money  and  the  guns  of  the 
people  are  heating  the  bulbs  of  poverty  and  pauperism  and  forcing  the 
mercury  ever  higher  in  the  tubes.  Existing  administrations,  the  cap- 
italistic elements  of  society  with  the  bulk  of  the  middle  classes  are 
progressively  increasing  the  number  of  Socialists'  votes.  They  do  it 
with  the  guns  and  the  indirect  taxes.  They  will  continue  to  do  it  as 
long  as  they  can,  they  cannot  stop  themselves  and  nothing  can  stop 
them. 

When  the  action  of  indirect  schedules  in  relation  to  the  distribution  of 
wealth  is  understood,  the  collapse  of  a  society  based  upon  indirect  taxa- 
tion seems  but  a  question  of  time.  The  history  of  the  end  of  existing 
societies  may  be  read  in  the  past.  The  fiscal  system  through  which  the 
modern  society  derives  its  life  will  supply  everything  necessary  for  its 
destruction:  Paupers  and  plutocrats  with  the  taxes  and  the  guns 
driving  the  mercury  ever  higher  in  the  tubes.  Sooner  or  later  the  mercury 
will  overflow,  and  the  bulb  below  will  burst,  as  it  always  has  in  the  past. 

Existing  administrations  live  upon  indirect  taxes,  but  the  indirect 
taxes  spread  the  poverty  and  pauperism  upon  which  they  rest.  The 
firmer  the  taxes  are  held,  the  stronger  becomes  the  explosive  force  beneath, 
and  the  higher  climbs  the  mercury.  In  other  words,  the  greater  becomes 
the  number  of  votes  at  the  disposition  of  radical  and  revolutionary 
leaders.  A  mass  and  an  idea,  brute  force  and  a  voice,  are  important 
things  in  practical  politics.  The  Socialist  leaders  are  gradually  beginning 
to  understand  what  they  mean  by  Socialism.  Existing  social  systems 
are  supplying  them  with  votes.  The  dispossessed  masses  are  the  driving 
wheels  of  revolutions.  An  idea  bringing  them  together  is  like  the  ex- 
plosive force  in  the  cylinders.    When  the  pressure  reaches  a  certain  point, 


590  Political  Practice  Pt.  V 

they  will  begin  to  move,  and  the  direction  taken  will  depend  entirely 
on  the  hand  at  the  throttle.  Existing  society  is  undermining  its  own 
foundations.     Socialism  seems  waiting  to  receive  it. 

What  is  Socialism?  A  railway  may  be  selected  as  illustration.  The 
railway  is  owned  by  one  man;  it  is  run  by  a  thousand  and  earns  a 
million  a  year.  The  combined  efforts  of  a  thousand  men  produce  a 
million  clear  profit  all  of  which  goes  to  one  man.  The  wages  of  the  nine 
hundred  and  ninety-nine  is  fixed  by  the  "iron  law";  if  they  produced 
two  million  they  would  all  go  to  one  man.  As  the  population  increases 
in  wealth  and  numbers,  profits  may  increase;  they  will  all  go  to  one 
man.  But  increase  in  population  may  intensify  competition  in  the 
labour  market.  Profits  may  go  up,  wages  may  fall,  all  the  gains  may 
go  to  one  man;  all  the  losses  to  the  nine  hundred  and  ninety-nine. 
This  suggests  the  following  considerations: 

The  annual  earnings  of  the  railway  are  produced  not  by  one  man  but 
by  a  thousand.  The  earnings  seem  to  belong  to  the  men  who  produce 
them,  owner  included.  The  title  to  the  annual  earnings  should,  there- 
fore, apparently  be  merged  in  the  ownership  of  the  entire  body  to  whose 
activities  they  are  due.  The  proper  distribution  of  the  net  produce  would 
thus  seem  to  be  throughout  the  thousand  producers  in  some  proportion 
to  service  rendered,  in  which  owner  and  worker  alike  would  receive  a 
normal  return.  But  if  this  can  be  done  with  one  industry,  why  not  with 
two?  Why  not  with  ten?  Why  not  with  all  the  productive  industries 
of  any  given  society?  The  total  annual  earnings  of  any  society  might 
be  divided  by  the  number  of  productive  workers.  The  result  might 
show  that  these  earnings  were  large  enough  to  check  the  growth  of 
poverty  and  pauperism  in  the  society,  and  keep  the  great  body  of  workers 
in  self-respecting  circumstances.  Why  then  should  not  these  earning 
powers  be  regarded  as  the  property  of  the  society  as  a  whole  and  controlled 
and  distributed  through  the  social  organization?  This  seems  the  basic 
idea  of  modern  Sociahsm.  It  may  be  found  in  the  words  of  a  member 
of  the  English  Parliament.  Mr.  Victor  Grayson  says  in  his  election 
address:  "I  am  a  Socialist,  and  believe  that  there  can  be  no  freedom  or 
security  for  the  working  classes  while  the  land  and  means  of  production 
are  owned  and  controlled  by  a  small  privileged  class."  A  mass  and  an 
idea  make  up  the  political  history  of  man.  Here  is  the  idea:  the  poli- 
ticians and  the  financiers  of  to-day  are  supplying  the  mass  as  rapidly  as 
they  can  turn  the  people  into  paupers,  unemployed,  and  plutocrats 
through  the  action  of  indirect  schedules.    When  the  mass  and  the  idea 


Bk.  II  Practical  Socialism  591 

meet,  existing  society  will  become  "theoretical "  and  Socialism  will  be 
"  practical." 

The  Socialist  programme  is,  then,  that  the  existing  sources  of  the  pro- 
duction of  wealth  are  no  longer  to  be  owned  and  controlled  by  individuals 
for  their  own  benefit;  but  owned  and  controlled  by  the  society  for  the 
benefit  of  all.  The  first  question  Is:  How  are  the  Socialists  to  get 
possession  of  these  productive  sources?  How  get  control  of  existing 
earning  powers?  There  are  only  two  ways  in  practical  politics:  Money 
or  gunpowder.  The  Socialists  must  buy  these  earning  powers,  or 
they  must  take  them  by  force.  They  can  never  get  possession  of  them 
in  any  other  way. 

If  they  are  to  be  purchased,  the  next  question  is :  How  much?  Where 
will  the  Socialists  get  the  money?  The  State.  Where  will  the  State 
get  the  money  to  merge  the  title  in  itself  to  the  entire  wealth  of  a  people, 
unless  the  people  hand  their  entire  wealth  over  to  it  as  a  gift?  It 
seems  safe  to  say,  if  any  party  ever  gets  control  of  a  nation's  legislature 
and  attempts  socialization  by  purchase,  that  the  world  has  never  seen 
such  a  financial  orgie  as  would  result.  Whatever  happened,  however, 
there  could  be  but  one  outcome:  the  Socialist  State  would  be  mortgaged 
forever  to  a  few  individuals  who  organized  the  merger.  It  may  be 
supposed,  however,  that  these  diflSculties  are  overcome  in  some  form 
or  other  which,  there  is  reason  to  believe,  they  would  never  be.  The 
next  question  is  with  reference  to  the  earning  powers.  If  the  Socialist 
State  continued  existing  indirect  taxes  in  order  to  continue  existing 
earning  powers,  the  people  would  continue  feeding  themselves  with  one 
hand  and  taking  the  food  out  of  their  mouths  with  another,  exactly  as 
they  are  doing  to-day;  and  they  always  take  out  more  than  they  put  in^ 
the  mere  cost  of  the  process  making  the  difference,  irrespective  of  other 
considerations. 

If  the  Socialist  State  buys  these  earning  powers,  based  upon  indirect 
taxes,  the  Socialist  State  must  continue  to  give  them  the  value  which 
they  to-day  possess.  But  their  present  value  is  only  maintained  by  the 
periodic  explosion  of  a  mixture  of  taxes  and  gunpowder  in  the  industrial 
cylinders  of  the  nation.  The  Socialist  State  would  be  forced  to  inflate 
these  same  values  by  the  same  means  which  inflate  them  to-day:  taxes 
and  gunpowder.  The  chances  are,  with  a  financial  orgie  at  the  start,  taxes 
and  gunpowder  as  the  inevitable  accompaniments  of  Socialism,  that,  un- 
der the  Socialistic  regime,  the  people  would  be  little  better  off  than  to-day. 
Their  situation  would,  in  all  probability,  be  worse;  for  experience  shows 


592  Political  Practice  Pt.  V 

that  the  routine  of  State  management  is  inadequate  to  meet  the  demands 
of  highly  organized  and  highly  specialized  industrial  enterprise.  There 
would  thus  be  taxes  and  gunpowder  at  the  beginning,  inevitably  de- 
creasing earning  powers,  with  the  equally  inevitable  necessity  of  in- 
creasing the  taxes  and  gunpowder;  which  presents  a  self -perpetuating 
series  of  by  no  means  alluring  possibilities.  It  may  be  supposed,  however, 
that,  after  purchasing  the  earning  powers,  the  Socialist  State  repealed 
the  taxes.  There  could  be  but  one  result.  The  Socialist  State  would 
find  that  it  had  purchased  a  big  balloon,  let  out  all  the  gas,  and  pos- 
sessed no  means  of  inflating  it  again.  Even  the  return  to  Socialistic 
taxes  and  gunpowder  could  never  revivify  productive  powers  and 
markets,  which  had  taken  years  of  patient  effort  and  the  most  active 
organization  and  competition  to  develop. 

But,  it  might  be  said,  all  these  difficulties  arise  from  an  error  at  the 
starting-point.  There  are  two  ways  of  merging  the  national  annual 
wealth.  The  Socialist  State,  even  in  order  to  purchase  it,  would  have 
to  be  possessed  of  sufficient  power  to  enforce  its  decrees;  but,  given  the 
power,  why  purchase  the  wealth?  Why  not  merge  it  at  once?  The  mere 
decision  of  an  assembly  would  be  sufficient  to  legalize  such  a  step  ■ — 
nothing  else  is  necessary.  In  this  way  the  society  would  avoid  all  financial 
difficulties  and  escape  the  incubus  of  a  perpetual  indebtedness,  while  the 
individuals  whose  wealth  had  been  absorbed  would  enjoy  all  the  ad- 
vantages of  the  other  members  of  the  society.  It  seems,  therefore,  as 
all  sovereignty  exists  but  in  the  decisions  of  a  society,  that,  by  the  sim- 
ple means  of  the  transfer  of  the  title  to  annual  wealth  from  the  individual 
to  the  social  organization,  it  becomes  possible  to  distribute  this  wealth 
in  beneficent  showers  throughout  the  whole  people,  instead  of  in  the 
form  of  more  or  less  turgid  and  congested  streams  as  at  present.  Such  a 
thing  could,  of  course,  be  done  by  force  alone;  and,  as  Socialism  of  this 
nature  seems  by  far  the  most  "practical"  measure  ever  likely  to  be 
adopted  in  any  attempt  at  radical  political  reorganization,  it  may  be 
given  a  moment's  attention. 

It  may  be  supposed,  then,  that  the  most  practical  method  of  socializing 
the  wealth  of  a  nation  is  cold  steel;  all  financial  complications  are  thus 
eliminated  in  a  moment,  and  the  process  has  but  to  be  put  in  prac- 
tice. Such  a  process  may  be  briefly  examined,  as  it  might  actually 
occur,  if  ever  attempted.  In  order  to  make  it  as  easy  as  possible, 
it  may  be  supposed  that  the  Socialists  have  gathered  together  enough 
money  and  bombs  to  bribe  the  police  and  blow  up  the  authorities.    The 


Bk.  II  Practical  Socialism  593 

Red  Flag  is  everywhere  victorious  from  the  sheer  weight  of  numbers 
gathered  beneath  it;  London,  or  Paris  or  New  York  lies  at  their  mercy; 
and  they  have  but  to  take  the  wealth  of  the  rich,  nationalize  it,  and  dis- 
tribute it  evenly  and  justly  throughout  the  society.  Let  us  suppose 
that  we  have  long  struggled  to  right  the  wrongs  of  the  people;  they  are 
grateful  to  us  and  appoint  us  chairman  of  a  committee  of  distribution. 
They  call  us  the  "  saviour  of  the  people."  It  is  obvious  that  we  cannot 
nationalize,  socialize,  distribute,  or  do  anything  else  with  the  wealth  of 
the  rich  until  we  have  it.  The  first  thing,  therefore,  is  to  get  it.  All 
v/e  have  to  do  is  to  take  it  and  distribute  it.  No  one  will  interfere  with 
us.  We  can  now  put  our  hopes  for  the  people  into  practice.  We  or- 
ganize a  committee  of  the  brave  comrades,  therefore,  take  along  a  few 
intellectuals  to  help  us  do  the  thinking,  and  begin  operations.  We 
may  begin  at  the  beginning  and  make  a  clean  sweep,  so  that  the  people 
may  get  all  the  wealth  of  the  rich  and  nothing  escape. 

The  most  obvious  thing  would  seem  to  be  to  loot  the  great  residential 
quarters.  Away  we  go  to  Park  Lane,  to  the  Place  de  I'Etoile  or  up 
Fifth  Avenue,  as  the  case  may  be.  The  result  of  this  expedition  will 
be  an  enormous  mass  of  books,  rugs,  furniture,  and  motor-cars,  which 
will  be  handed  out  to  the  people  through  the  distributing  organization, 
as  fairly  as  possible,  doubtless  amidst  great  rejoicing:  the  people  have  at 
last  come  into  their  own.  Some  little  confusion  might  be  occasioned, 
perhaps,  as  it  was  found  that  there  were  not  enough  pictures  and  motor- 
cars to  go  round,  and  that  the  only  way  to  distribute  them  with  any 
degree  of  fairness  would  be  to  cut  the  pictures  in  pieces  and  take  the 
cars  apart.  Of  course  they  could  not  be  sold,  and  the  money  distrib- 
uted, for  these  things  are  of  use  to  the  rich  alone,  and  all  the  rich  would 
have  been  forced  to  leave  the  country  or  pretend  they  were  enjoying 
themselves  with  the  brave  comrades;  that  is,  there  would  be  no  rich  any 
more  to  buy  these  things  and  we  would  simply  have  to  do  the  best  we 
could  with  them. 

One  of  the  intellectuals  will  say  that  this  is  not  the  real  wealth  we 
are  seeldng,  and  we  begin  a  closer  search.  The  result  of  this  will  be 
some  plate,  silver  and  jewellery,  which  the  rich  had  not  been  able  to  take 
away  with  them  in  their  flight.  This  will  be  better,  it  can  be  melted; 
and  each  of  the  comrades  will  receive  a  small  piece  of  bullion,  and  their 
wives  some  dust  as  their  share  of  the  diamonds  and  the  emeralds.  This 
may  seem  a  little  disappointing,  for  all  we  have  distributed  so  far  are 
some  pneumatic  tires  and  a  few  shillings  worth  of  bullion.    One  of  the 


5Q4  Political  Practice  Pt.  V 

intellectuals  finds  a  bank  book  somewhere,  and  then  we  see  the  light. 
The  pneumatic  tires  and  the  sofa  cushions,  he  says,  are  not  the  wealth  we 
are  after;  the  real  wealth  of  the  rich  Hes  in  the  banks  and  the  trust  com- 
panies. A  triumphal  expedition  will  be  made  to  the  "City,"  to  Wall 
Street,  or  the  Place  de  la  Bourse.  The  bank  books  show  where  are 
millions  and  millions  of  the  wealth  of  the  rich  which  we  have  but  to 
divide  up.  In  the  banks  we  find  a  great  number  of  ledgers  and  papers 
and  a  very  small  portion  of  the  money  expected.  Part  of  this  money  will 
be  in  paper  and  an  infinitely  small  portion  in  coin.  The  paper  money  will, 
of  course,  be  worth  exactly  as  much  as  it  is  worth  in  the  form  of  paper 
pulp.  The  banks  which  issued  it  will  be  ruined,  and  the  governments 
behind  it  will  not  be  able  to  oppress  the  people  any  more  by  redeeming 
their  obligations  to  them.  Each  of  the  brave  comrades,  therefore,  will 
receive  his  share  of  paper  pulp,  for  it  could  only  be  divided  by  weight 
with  any  degree  of  fairness.  The  coin  would  have  to  be  put  through  the 
same  process.  If  all  the  coin  in  any  great  nation,  to-day,  were  divided 
evenly,  each  individual  would  receive  a  few  dollars,  francs  or  shillings, 
as  the  case  might  be,  and  these  would  soon  disappear  from  the  masses 
in  return  for  provisions;  for  it  must  be  remembered  that  all  sources  of 
income  would  be  dried  up  in  a  moment,  the  circulation  of  money  through 
the  regular  channels  would  be  checked,  and  all  forms  of  wages  and  em- 
ployment cease. 

After  the  coin  and  the  paper  had  been  distributed,  one  of  the  intel- 
lectuals might  say  that  we  had  not  yet  reached  the  real  thing.  The 
real  wealth  of  the  rich,  he  says,  lies  down  in  the  vaults  in  the  form  of 
bonds  and  securities.  At  last  we  have  found  what  we  are  after;  now  we 
can  really  begin  to  divide  up  the  wealth  of  the  rich.  A  drill  and  a  little 
dynamite  do  the  work  in  a  moment.  The  light  begins  to  dawn  and  now 
the  wealth  can  really  be  distributed  to  the  people.  Down  we  go  into  the 
vaults  with  great  rejoicing.  There  are  found  innumerable  tin  boxes 
filled  with  papers  —  paper,  paper,  paper,  always  paper;  nothing  but 
paper.  And  here  arises  an  important  question.  How  shall  this  paper 
be  distributed?  Shall  it  be  reduced  to  pulp,  cut  into  small  pieces,  or  shall 
we  add  up  the  millions  it  represents,  divide  the  total  by  the  number  of 
the  people,  and  tell  each  one  he  is  worth  so  much?  If  we  do  the  latter, 
and  the  people  say  they  would  like  to  have  the  money,  all  we  could  give 
them  would  be  pieces  of  paper.  If  we  try  to  sell  the  paper,  no  one  would 
buy  it.  Not  one  of  its  obligations  would  be  honoured;  not  a  franc,  shil- 
ling or  dollar  would  be  paid  on  it.     Every  industry  it  represented  would  be 


Bk.  II  Practical  Socialism  595 

ruined  and  have  shut  down,  owing  to  the  impossibility  of  getting  money 
required  for  running  expenses.  The  obHgations  of  the  previous  govern- 
ment would  be  equally  worthless.  We  would  be  the  government.  If  we 
wish  these  pieces  of  paper  to  have  any  value,  we  would  have  to  pay  the 
money  obligations  they  represent.  But  the  brave  comrades  have  all 
the  money.  If  they  wish  the  paper  to  have  any  value,  they  will  have 
to  pay  its  obligations  to  the  owners  of  the  paper.  But  the  brave  com- 
rades have  all  the  money  and  all  the  paper  as  well.  In  other  words, 
they  would  have  to  pay  themselves  the  money  which  they  have,  for  the 
paper  which  they  also  have.  In  other  words,  there  is  not  the  slightest 
use  in  distributing  the  paper  at  all,  and  we  might  as  well  burn  it  up. 
It  seems  we  have  not  got  our  hands  on  the  wealth  of  the  rich,  as  yet,  by 
any  means. 

One  of  the  intellectuals  is  thinking  the  matter  over.  He  says :  "  These 
pieces  of  paper  represent  land,  industries,  and  property  of  various  kinds. 
The  paper  is  not  the  wealth  ;  the  properties  are  the  real  wealth  of  the 
rich  and  all  we  have  to  do  it  to  take  these  and  distribute  them  systemati- 
cally throughout  to  the  people.  At  last  we  see  the  light;  now  we 
can  begin  operations  in  earnest.  This  intellectual  shows  signs  of  fiscal 
intelligence;  we  appoint  him  our  Minister  of  Finance  and  begin  again. 
Out  we  go  to  Birmingham  and  Manchester  to  get  the  wealth  of  the 
rich;  to  the  industrial  centres  of  the  country;  up  the  Hudson  or  down  the 
Seine.  Everything  will  be  arranged  now  and  the  people  soon  be  com- 
fortable and  happy. 

These  matters,  however,  would  be  taking  up  time;  the  people  from  the 
provinces  would  be  crowding  into  the  city  to  get  their  share  of  the  wealth 
of  the  rich.  We,  of  the  city,  would  go  out  to  the  provinces  to  get  the 
wealth  of  the  rich.  No  wages,  of  course,  would  be  paid  anywhere; 
all  the  owners  of  the  industries  would  have  fled  or  be  turned  out  of 
possession.  The  provisioning  of  the  city  would  be  checked.  The  small 
amount  on  hand  would  be  consumed  in  a  short  time.  Prices  will  go  up 
with  astonishing  rapidity.  The  people  in  the  city  will  be  growing  hun- 
gry at  the  same  rate.  They  will  grow  very  hungry  in  a  very  few  days,  and, 
after  the  first  novelty  of  the  thing  had  worn  off,  they  might  tire  of  the 
diet  of  chandeliers,  lace  curtains  and  worthless  securities  which  would 
be  all  we  could  hand  out  to  them.  However,  we  issue  a  bulletin,  saying 
that  we  have  at  last  found  the  wealth  of  the  rich,  and  would  distribute 
it  at  once;  a  little  patience  is  all  that  is  necessary. 

Out  in  the  provinces,  where  we  have  now  gone  to  get  the  wealth,  we  will 


596  Political  Practice  Pt.  V 

find  a  Sabbath-like  stillness;  the  great  wheels  of  the  industries  will  be 
motionless;  the  engines  silent;  the  fires  out.  However,  we  can  now  begin 
to  distribute  the  wealth.  Shall  we  send  a  few  trainloads  of  brick  down 
to  the  city  to  check  the  famine,  or  would  the  people  prefer  to  divide 
up  the  corrugated  iron  roofing  at  first?  Shall  we  cut  the  boiler  tubes 
into  halves  or  quarter  sections  for  distribution?  Shall  we  take  down  the 
smokestacks,  or  try  to  sell  them  as  they  stand  to  some  of  the  brave  com- 
rades or  the  intellectuals  ?  The  Minister  of  Finance  meets  these  questions 
with  a  supercilious  smile.  "Is  it  not  the  boiler  tubes  and  the  smoke- 
stacks which  constitute  the  wealth  of  the  rich,"  he  says,  "we  must 
take  these  properties  and  run  them  for  the  benefit  of  the  people."  The 
wealth  of  the  rich  has  escaped  us  again.  However,  this  time  we  really 
do  know  where  it  is  and  will  soon  be  able  to  divide  it  up  among  the  people. 
We  issue  peremptory  orders  to  the  Minister  of  Finance  to  put  the  in- 
dustries on  a  working  basis  and  to  distribute  the  profits  to  the  people 
at  once.  He  says  that  he  will  follow  our  instructions  to  the  letter 
immediately  —  all  that  is  necessary  is  so  many  hundreds  of  millions 
of  capital.  What  is  to  be  done?  "  Produce  the  money,"  says  the  Minister 
of  Finance,  "or  divide  up  your  industries  in  the  form  of  bricks  and  scrap 
iron."  We  call  a  formal  meeting  of  all  the  comrades  and  the  intellectuals. 
None  of  them  seem  anxious  to  lend  us  a  few  hundred  millions  at  this  time* 
but  all  agree  that  some  systematic  attempt  must  be  made  in  order  to 
get  the  money;  in  order  to  get  the  wealth  of  the  rich,  in  order  to  divide  it 
up  among  the  people.  If  we  go  down  to  the  city,  we  will  probably  dis- 
cover that  the  looting  of  the  banks  and  the  disembowelling  of  the  vaults 
is  not  conducive  to  the  floatation  of  securities  to  any  large  amount. 
"  Money  or  scrap  iron,"  says  the  Minister  of  Finance.  What  can  be  done? 
"Taxes,"  says  the  Minister  of  Finance.  The  comrades  and  the  in- 
tellectuals say  there  is  nothing  else  to  do.  We  take  a  map;  cut  the 
people  into  local  units  under  local  administrations,  and  begin  to  assess 
taxes  as  lightly  and  fairly  as  we  can.  A  little  money  comes  in.  As 
soon  as  some  vestige  of  order  begins  to  appear,  we  may  be  able  to  bor- 
row a  little  more  here  and  there  by  hypothecating  the  taxes.  Things 
begin  to  look  better.  We  start  up  a  small  number  of  the  industries, 
as  soon  as  the  profits  come  in  we  will  divide  them  up;  money  will  begin 
to  circulate  and  we  will  be  ble  to  start  up  the  rest  of  the  industries. 

All  this,  however,  will  be  taking  up  time.  The  famine  in  the  city 
will  burst  into  flames  now  and  then.  Some  of  our  measures  are  not 
popular.    We  hear  the  word  "traitor"  is  bandied  about  with  our  name 


Bk.  II  Practical  Socialism  597 

attached  to  it.  Some  of  the  brave  comrades  have  deserted  us,  and  are 
forming  counter  organizations.  We  must  have  a  police  force  to  keep 
them  in  order,  or  they  will  destroy  all  our  plans  just  as  we  are  on  the 
point  of  getting  the  wealth  of  the  rich  and  dividing  it  up.  We  must 
protect  the  people  at  all  hazards.  Out  in  some  of  the  provinces  opera- 
tives, thrown  out  of  work,  will  revolt  against  us  and  want  to  go  back  to 
the  old  order  in  which  at  least  they  had  something  to  eat.  We  must 
repress  the  enemies  of  the  people.  A  small  military  organization  is 
necessary  —  more  taxes,  more  police.  However,  these  things  are 
essential,  if  we  are  ever  going  to  get  the  wealth  of  the  rich  in  order  to 
divide  it  among  the  people.  Other  matters  will  require  attention. 
Some  of  the  rich  people,  whose  wealth  we  are  trying  to  distribute,  have 
fled  to  other  countries;  they  want  to  come  back  and  get  their  property. 
We  have  destroyed  enormous  values  and  markets  affecting  neighbouring 
societies;  great  financial  interests  are  involved;  they  combine,  and  there 
is  an  ominous  movement  of  troops  about  our  frontiers.  Military  organ- 
ization is  necessary;  we  appeal  to  the  patriotism  of  the  people;  they 
respond  with  alacrity  in  order  to  protect  themselves  against  the  t3n-ants 
and  the  foreigners  —  taxes,  loans,  debts. 

However,  the  Minister  of  Finance  has  been  at  work;  and  it  is  now  time 
to  divide  up  the  profits  of  the  industries  in  operation.  At  last  we  will 
get  some  of  the  wealth,  at  least,  and  all  will  be  well.  We  call  for  his 
report.  Yards  of  figures:  Enormous  deficit.  "It  could  not  be  otherwise," 
says  the  Minister  of  Finance,  "for  the  reason  that  when  we  took  over 
these  properties,  the  plants  were  either  designed  and  built  with  reference 
to  a  protective  system  of  taxation  or  to  supply  markets  which  were  so 
dependent.  The  result  is,  that  unless  we  tax  and  protect  our  markets 
as  they  were  protected  before,  we  can  never  run  these  plants  at  a  profit." 
The  wealth  of  the  rich  has  eluded  us  once  more;  we  never  seem  to  be 
able  to  get  our  hands  on  it.  However,  now  we  really  know  where  it  is. 
All  we  have  to  do  is  to  protect  the  markets  and  divide  up  the  profits  among 
the  people.  On  go  the  taxes,  every  kind  of  a  protective  tax  of  which 
any  one  can  think.  We  study  these  in  relation  to  foreign  schedules, 
and  add  certain  percentages  to  them  so  that  the  people  will  be  armed 
with  a  tariff-weapon,  and  we  can  thus  gain  concessions  from  the  foreigner 
without  affecting  our  own  industries.  Some  of  the  intellectuals  will 
begin  to  theorize,  but  we  are  practical  men  and  have  no  time  to  listen 
to  theories.  We  must  protect  the  people  "  practically,"  or  we  will  never 
get  the  wealth  of  the  rich  to  distribute. 


598  Political  Practice  Pt.  V 

But  the  Minister  of  Finance  has  not  done  with  his  report:  "Military 
and  administrative  expenses,"  he  says,  "are  increasing  and  must  be  met, 
if  we  are  to  get  the  wealth  of  the  rich  and  protect  the  people  from  the 
tyrants.  So  many  millions  are,  therefore,  an  absolute  necessity  if  our 
Administration  is  not  to  collapse  when  on  the  point  of  realizing  the 
wealth  we  are  seeking  for  the  benefit  of  the  people."  All  taxes  are  hy- 
pothecated under  a  thousand  different  forms  and  these  resources  ex- 
hausted. The  issue,  therefore,  resolves  itself  simply  into  raising  more 
money  or  abandoning  the  people  to  the  oppressors.  He  lays  his  plain 
before  us.  "Our  Administration,"  he  says,  "is  in  possession  of  great 
resources:  resources  which  conservatively  estimated  represent  so  many 
thousands  of  millions.  We  are  holding  these  for  the  benefit  of  the  people 
and  these  resources  will,  of  course,  be  turned  over  to  the  people  as  soon  as 
their  real  annual  value  can  be  realized,  which  is  impossible  at  present, 
owing  to  the  lack  of  credit  and  accumulations  of  capital  in  the  country. 
"Let  us,  therefore,"  he  continues,  "sell  these  properties  to  the  local  ad- 
ministrations, and  allow  them  to  pay  us  for  them  with  certificates  based 
upon  the  properties,  and  the  lands  which  they  represent.  These  certifi- 
cates will  thus  always  have  a  sound  and  real  value  behind  them,  and  with 
these  certificates,  we  will  be  able  to  pay  our  debts,  develop  the  industries 
support  our  troops  and  protect  the  liberties  of  the  people." 

There  will  be  debates  in  the  Assembly  about  this  time;  some  of 
the  intellectuals  will  croak.  They  say  we  are  trying  a  dangerous 
game  that  has  been  tried  before.  We  ask  them  to  suggest  something 
better,  something  "practical."  They  say  nothing  more.  But  our  Min- 
ister of  Finance  will  answer  their  objections.  "Our  issues,"  he  says, 
"are  not  analogous  to  other  issues  of  the  same  kind.  Are  we  not  the 
chosen  and  disinterested  representative  of  the  people  and  their  liberties? 
Will  not  these  issues  be  wisely  controlled  and  limited  by  us?  Are  they 
not  based  upon  the  most  secure  of  all  wealth?  —  the  land  on  which  we 
tread.  When  times  get  better,  will  they  not  necessarily  be  reabsorbed 
through  the  purchase  of  the  national  domains  from  the  local  administra- 
tions?" At  last,  we  begin  to  see  the  light;  at  last  we  have  found  a  way 
to  get  the  wealth  of  the  rich  "practically."  All  we  have  to  do  is  to  discount 
it,  to  assign  it,  as  it  were,  to  the  people.  We  see  signs  of  fiscal  genius 
in  our  Minister  of  Finance.  These  issues,  moreover,  we  perceive,  will 
possess  other  advantages.  They  will  scatter  the  titles  to  real  property 
throughout  the  nation,  through  the  local  administrations,  and  render 
our  government  that  much  more  secure. 


Bk.  II  Practical  Socialism  599 

But  beside  these  theoretical  considerations,  the  Minister  of  Finance 
invariably  ends  his  speeches  with  the  bald  statement:  "Paper  Money 
or  collapse."  Collapse  is  not  a  pretty  thing  when  we  are  on  the  verge 
of  getting  the  wealth  of  the  rich  to  distribute  to  the  people.  We  must 
get  the  wealth  at  all  events.  The  people  have  put  their  trust  in  us  and 
we  will  not  prove  false  to  them  or  to  it.  The  presses  are  put  to  work, 
and  a  shower  of  paper  money  falls  over  the  population.  At  last  the 
people  are  getting  the  wealth  in  practical  form  and  soon  all  will  be  rich 
and  happy.  The  administration  is  now  in  funds;  we  can  start  all  the 
industries  and  distribute  the  profits  as  fast  as  they  come  in. 

Our  government,  it  must  be  remembered,  is  a  workingman's  govern- 
ment. It  is  formed  for  the  workers  and  we  think  of  them  alone.  What 
we  want  to  do  for  the  workers  is  to  divide  up  the  wealth  of  the  rich  among 
them  in  return  for  their  work.  How  can  we  do  it?  As  the  result  of  the 
next  meeting  of  the  Assembly,  we  isssue  the  following: 

The  government  of  the  people  binds  itself  to  guarantee  the  existence 
of  workmen  by  means  of  work. 

It  binds  itself  to  guarantee  work  to  every  citizen. 

The  government  decrees  the  immediate  establishment  of  national 
workshops.  The  minister  of  public  works  is  charged  with  the  execution 
of  the  present  decree. 

The  Members  of  the  Government. 

Matters  look  more  promising.  The  people  are  delighted.  The  in- 
dustries are  at  last  put  in  motion  and  we  will  soon  di\ide  the  profits. 

In  the  meantime  troops  are  beginning  to  cross  our  frontiers;  heads  of 
columns  are  reported  in  other  directions,  and  uprisings  take  place  in  cer- 
tain provinces  in  sympathy  with  these.  It  is  necessary  to  send  a  column 
or  two  to  the  northward  and  a  body  of  horse  to  the  disaffected  provinces. 
These  troops  must  be  handled  efficiently  and  intelligently.  A  young 
colonel  of  cavalry  or  captain  of  artillery  shows  signs  of  ability,  and  we 
are  glad  to  throw  responsibility  into  his  hands  while  we  look  after  the 
civil  and  financial  affairs  of  the  nation.  These  affairs  are  growing 
complicated  on  another  side  and  demand  attention.  Oiu"  paper  money 
is  coming  back  to  us  in  taxes.  If  we  refuse  it,  and  demand  taxes  in 
specie,  we  will  depreciate  our  own  money.  If  we  suppress  it  as  it  comes 
in,  we  will  have  no  funds  with  which  to  carry  on  the  government.  Our 
paper  money  comes  in,  and  out  it  goes  again.    The  faster  it  comes  in. 


6oo  Political  Practice  Pt.  V 

the  faster  it  goes  out;  the  faster  it  goes  out,  the  more  it  depreciates;  the 
more  it  depreciates,  the  faster  it  goes  out;  and  the  faster  it  goes  out 
the  faster  it  comes  in.  However,  we  must  turn  our  attention  to  other 
matters. 

It  is  now  time  to  distribute  the  profits  of  the  national  industries. 
The  people  will,  at  last,  get  the  wealth  of  the  rich.  Yards  of  figures: 
Enormous  deficit.  ''Regrettable  but  unavoidable,"  says  the  Minister 
of  Finance.  "The  reason  is  that  under  the  old  order  these  industries 
possessed  a  market.  To-day  no  such  market  can  be  found.  Multi- 
ply protective  taxes  as  we  will,  no  market  can  be  developed  which  permits 
running  at  a  profit.  The  reason  seems  to  be  the  checking  of  the  pre- 
vious circulation  of  wealth."  He  closes  his  address  with  the  words: 
"Another  issue  of  paper  money  or  close  up  your  industries,  disband  your 
armies  and  allow  the  tyrants  to  take  possession  of  the  people."  We 
must  protect  the  people  at  all  hazards  until  we  get  the  wealth  of  the 
rich  to  distribute  to  them.  We  are  practical  men  and  have  no  time  to 
theorize  about  the  limitations  of  paper  money  issues.  Out  goes  the 
paper,  or  out  we  go  ourselves  and  abandon  the  people  to  the  tyrants 
and  oppressors.  That  is  all  there  is  to  it.  If  any  of  the  intellectuals 
make  trouble  and  try  to  stir  up  sedition  among  the  people,  the  jail  or 
the  guillotine  awaits  them;  theories  will  never  get  the  wealth  of  the 
rich  to  distribute  to  the  people. 

Another  issue  of  paper  money;  down  it  goes  in  value,  and  up  goes  the 
price  of  provisions.  Specie  begins  to  disappear  from  circulation.  Our 
wisdom  and  farseeing  statesmanship,  however,  are  equal  to  the  occasion. 
In  order  to  bring  back  specie,  we  forbid  speculation  in  it  under  penalty 
of  six  years  in  irons;  and  specie  disappears  altogether.  We  forbid  the 
sale  of  our  money  below  par  under  penalty  of  twenty  years  in  chains  — 
and  the  market  is  flooded  with  counterfeits.  We  forbid  the  investment 
of  all  capital  abroad  under  the  penalty  of  death  —  and  subscriptions 
are  opened  abroad  in  order  to  speculate  in  our  securities.  We  fix  a 
maximum  price  for  provisions,  force  dealers  to  observe  it  —  and  the 
dealers  go  out  of  business.  We  force  them  to  sell  —  they  adulterate 
the  provisions.  We  put  a  forced  price  on  everything  we  can  reach  — 
and  two  prices  come  into  existence:  one  public,  the  other  secret.  How- 
ever, we  must  turn  our  attention  to  other  matters. 

The  minister  of  Finance  reports  another  deficit  in  the  national  in- 
dustries. The  people  begin  to  grow  restive  in  paying  taxes  in  order  to 
support  a  body  of  workmen  in  unprofitable  enterprise.    We  get  to  work 


Bk.  II  Practical  Socialism  6oi 

with  the  tariffs  and  the  octrois.  We  plunge  into  the  custom  houses  and 
the  indirect  schedules;  taxes  are  piled  up  in  every  conceivable  way  for 
the  benefit  of  the  people;  we  must  protect  the  people  whatever  hap- 
pens. Another  yawning  and  growing  deficit:  same  reasons.  We  are 
forced  to  shut  up  the  industries.  This  throws  a  vast  body  of 
workmen  out  of  employment.  The  spectre  of  famine  stalks  in  the 
city.  The  people  loot  the  provision  dealers.  We  tell  the  police  to  be 
lenient;  the  people  must  live.  The  people  loot  more  dealers,  and  the 
dealers  go  out  of  business.  The  mayor  of  the  city  is  on  the  spot  and 
knows  what  he  is  talking  about.    He  issues  the  following  bulletin: 

The  Mayor  to  His  Fellow  Citizens: 

The  City  contains  so  many  millions  of  inhabitants;  the  soil  of  the 
City  produces  nothing  to  eat,  any  more  than  the  deck  of  a  ship  at  sea. 

When  provisions  come  to  the  City,  if  the  inhabitants  rob  the  owners 
of  them,  supplies  will  cease  to  be  sent. 

The  City  will  have  nothing  with  which  to  feed  the  millions  of  its 
inhabitants. 

So  many  millions  of  persons,  destitute  of  everything,  will  devour  each 
other. 

This  is  the  red  spectre  of  famine  in  a  great  city  —  it  is  as  real  as  hunger 
and  as  practical  as  bloodshed.  We  strengthen  the  poKce  force,  move 
troops  up  around  the  City,  and  issue  orders  to  put  down  the  red  spectre 
at  all  hazards.  Strong  counter-revolution  against  us  in  the  large  centres 
of  population.  There  is  treason  in  the  hearts  of  the  people.  Some  of 
tliem  are  corresponding  with  the  t3a'ants  and  oppressors.  Risings  occur 
in  the  provinces.  Bands  of  robbers  are  forming  on  every  side;  honest 
hard-working  country  people  are  turned  into  thieves  and  cutthroats ; 
for  all  the  sources  of  their  livelihood  have  been  dried  up.  In  every 
opposition  we  see  the  germ  of  sedition.  There  is  treason  in  the  city, 
treason  in  the  Assembly;  treason  and  tyrants  everywhere.  The  people 
must  be  protected,  come  what  may;  we  set  up  a  guillotine  in  the  city. 
We  send  out  guillotine  expeditions  to  the  provinces.  They  cannot 
work  fast  enough.  The  traitors  clog  the  knives.  We  form  them  into 
squads  and  shoot  them  down;  we  load  them  into  hulks  and  sink  them 
like  rats  in  the  rivers,  so  that  the  very  fish  are  polluted,  and  we  have  to 
issue  a  decree  forbidding  a  starving  population  to  eat  the  only  food  it 
can  get,  for  fear  of  a  pestilence;  and  the  pestilence  comes  in  spite  of  us  and 
our  decrees.     It  is  simply  a  question  of  mass  against  mass.    If  we  do  not 


6o2  Political  Practice  Pt.  V 

exterminate  them,  they  will  exterminate  us;  that  is  all  there  is  to  it, 
"practically." 

Our  strong  and  statesmanlike  conduct  is  beginning  to  show  results, 
however,  and  we  can  now  turn  our  attention  to  other  matters  in  order 
to  get  the  wealth  of  the  rich  and  distribute  it  to  the  people.  Our  re- 
pressive and  military  operations  cost  money;  the  more  they  cost  the  more 
paper  we  must  issue;  the  more  we  issue,  the  less  it  is  worth;  the  less  it  is 
worth,  the  more  we  issue.  There  is  nothing  else  to  do  "practically." 
Down  it  goes;  down,  down,  down.  The  more  we  issue  the  less  it  is 
worth,  and  the  less  it  is  worth  the  more  we  issue,  down,  down,  down. 
There  is  no  more  trouble  in  the  Assembly  about  the  issues,  no  more 
theorizing;  they  come  out  in  floods  instead  of  in  showers.  Some 
of  the  intellectuals  are  beginning  to  understand  how  to  protect  the 
liberties  of  the  people  with  great  patriotic  enthusiasm  and  make  a 
little  money  for  themselves  at  the  same  time.  The  debtor  class  is 
beginning  to  be  felt  at  the  meetings.  It  is  no  little  convenience  to  be 
able  to  pay  obligations  in  a  depreciating  money.  If  we  watch  the  As- 
sembly closely,  we  will  learn  when  it  is  a  good  time  to  buy  heavily  — 
and  defer  payments.  Speculation  goes  on  everywhere ;  we  can  force  a  man 
to  take  paper  for  specie,  but  we  cannot  force  him  to  give  specie  for  paper. 
Down,  down,  down.  We  must  begin  to  watch  our  paper  money  closely 
now,  or  we  will  get  into  trouble.  We  float  or  sink  with  it.  Something 
must  be  done  to  put  it  and  the  finances  in  order  and  check  the  ruinous 
speculation  in  our  money. 

We  have  now  flooded  the  country  with  an  enormous  volume  of  paper 
and  the  expedients  to  which  we  have  been  driven  to  raise  funds  have 
created  an  infinite  variety  of  different  forms  of  securities,  all  represent- 
ing different  kinds  of  values  and  bearing  different  rates  of  interest. 
Speculation  is  rampant  in  these  on  every  side  and  fortunes  are  beginning 
to  accumulate  with  great  rapidity.  The  people  do  not  like  it:  they  say 
that  the  members  of  the  Administration  are  making  money  out  of  their 
own  decisions.  Something  must  be  done.  Our  minister  of  Finance 
is  equal  to  the  occasion.  We  merge  all  public  loans,  all  debentures, 
all  obligations  of  all  kinds  in  one  form,  bearing  one  fixed  and  moderate 
rate  of  interest.  This  at  once  checks  speculation  in  our  securities  for  all 
values  are  alike.  Our  wisdom  and  fiscal  ability  however  do  not  stop 
here.  The  local  administrations  have,  of  course,  need  of  money  to 
continue  in  existence  and  protect  the  people  from  the  tyrants  and  op- 
pressors.   These  local  finances  give  rise  to  speculation  and  peculation. 


Bk.  II  Practical  Socialism  603 

We  therefore  bind  ourselves  with  all  local  obligations,  and  bind  ourselves, 
at  the  same  time,  not  to  seize  the  properties  upon  which  they  are  based 
until  the  sums  are  liquidated. 

Benevolence  and  fiscal  intelligence  can  go  no  farther;  besides  which  it 
is  an  excellent  move  to  strengthen  the  Administration.  Our  next  step 
will  be  to  merge  all  local  obligations  with  the  one  central  obligation  and 
reduce  the  whole  series  to  the  same  rate  of  interest.  We  inscribe  all 
national  and  local  obhgations  combined,  in  a  Great  Book:  one  debt,  one 
rate.  In  this  way  we  become  a  debtor,  a  creditor,  a  popular  representa- 
tive and  a  benevolent  despot  all  in  one;  not  alone  in  reference  to  the 
central  administration  but  in  connexion  with  the  provinces  as  well. 
This  strengthens  us  throughout  the  entire  country,  it  is  impossible  to 
be  stronger;  and,  at  the  same  time,  it  throws  the  control  of  all  fiscal 
and  financial  affairs  into  our  own  hands.  We  are  too  clever  for  the 
speculators;  we  can  outwit  them  at  their  own  game.  All  values  are 
uniform  at  this  juncture  and  we  are  in  absolute  control.  However,  it  is 
notessential  to  stop  speculation  alone;  our  papermoneymust  be  strength- 
ened as  well.  We  are  worth  exactly  as  much  as  it,  no  less,  no  more. 
Its  value  must  now  be  supported  in  order  to  save  the  people  from  the 
tyrants,  in  order  to  get  the  wealth  of  the  rich,  in  order  to  divide  it  among 
the  people.  There  are  two  ways  of  doing  this:  one  is  to  bring  specie 
back  into  circulation;  the  other  to  check  the  issues  of  the  paper.  Both 
will  be  done  at  the  same  time;  turning  our  attention  first  to  specie: 

We  repeat  our  decrees  awarding  six  years'  imprisonment  to  every  man 
who  buys  or  sells  specie.  We  sentence  every  man  who  refuses  our  paper, 
or  who  pays  it  out  at  a  loss,  to  an  enormous  fine  and  six  months'  impris- 
onment for  the  first  offence;  double  the  fine  and  twenty  years'  impris- 
onment for  the  second.  We  decree  that  all  hidden  and  hoarded  gold, 
silver  and  jewellery  shall  belong  partly  to  the  informer  and  partly  to  the 
government.  In  certain  localities  we  abolish  specie  altogether,  and 
order  it  to  be  brought  to  the  authorities  and  exchanged  for  paper.  This 
will  enable  us  to  float  the  specie  wherever  and  whenever  it  will  do  the  most 
good  in  supporting  our  paper  money.  These  measures  have  more  success 
than  we  hoped:  specie  is  beginning  to  come  back  into  circulation  in  the 
centres.  Our  paper  money  suddenly  jumps  into  new  hfe  and  shows 
great  vitaHty.  Things  at  last  look  encouraging,  and  we  will  now^  turn  to 
the  isuues  in  order  to  limit  these  as  much  as  possible.  We  must  support 
this  hopeful  rise  in  our  paper. 

In  order  to  stop  the  issues,  we  now  defray  certain  expenses  over  a 


6o4  Political  Practice  Pt.  V 

certain  amount,  with  an  entirely  new  form  of  paper.  These  certificates 
^Aill  represent  large  amounts  only,  and  thus  will  not  compete  in  the 
ordinary  currency.  Up  goes  our  paper  money  faster  than  we  expected. 
We  next  issue  a  new  form  of  paper,  based  upon  certain  specific  properties. 
This  paper,  therefore,  can  never  fall  below  the  value  of  those  properties 
and  consequently  cannot  injure  our  paper  money.  Up  goes  our  paper 
at  every  step  we  take.  Finance  is  a  beautiful  thing  when  thoroughly 
mastered.  We  next  issue  another  form  of  paper,  redeemable  at  sight 
in  certain  specific  properties.  We  select  the  best  men  in  the  country, 
organize  them  into  banking  institutions,  give  them  certain  properties, 
with  power  to  issue  notes  against  these.  These  notes  we  then  borrow 
from  them  in  order  to  meet  expenses.  In  this  way,  these  institutions 
will  be  behind  the  notes  and  our  own  issues  may  be  proportionately 
limited.  Up  goes  our  paper  money  with  leaps  and  bounds  —  up,  up,  up. 
We  then  issue  another  form  of  paper,  representing  the  current  revenues 
of  the  year;  another  form  redeemable  by  the  treasurer  in  specie  under 
certain  conditions;  another  form  redeemable  by  the  treasurer  in  specie 
under  other  conditions;  another  form  of  paper  representing  voluntary 
loans;  another  form  representing  forced  loans.  Up  goes  our  paper 
money,  back  comes  the  specie.  Things  are  looking  bright.  It  is  a 
fortunate  thing  for  the  people  that  they  are  blessed  with  such  a  Minister 
of  Finance  as  ours;  no  one  else  could  have  outwitted  the  speculators 
so  cleverly.  Our  paper  money  has  touched  par  and  every  one  will  soon 
be  rich  and  happy. 

While  we  are  congratulating  our  Minister  of  Finance  the  bottom 
suddenly  drops  out  of  our  paper  and  specie  begins  to  disappear.  What 
can  be  the  trouble?  The  people  say  that  the  speculators  had  been  watch- 
ing our  operations  and  helping  us  along  in  putting  up  the  rate  for  our 
paper  by  the  simple  expedient  of  retiring  a  few  millions  from  circulation 
now  and  then,  in  order  to  pour  them  out  as  soon  as  we  had  worked  our 
money  up  to  par.  They,  of  course,  knew  that  we  would  do  everything 
we  could  to  keep  it  there  and  help  them  turn  an  honest  penny  at  the 
same  time.  They  knew,  if  they  helped  us  put  up  the  rate,  that  we  would 
help  them  realize  when  the  time  came.  Reciprocity  is  a  great  principle 
in  finance.  The  people  say  the  speculators  made  great  sums  in  this 
move.  In  order  to  protect  our  paper  issues,  we  have  now  flooded  the 
country  with  a  new  and  vastly  complicated  mass  of  paper;  speculation 
is  rampant  at  once.  Financial  companies  are  coming  into  existence 
which  use  their  influence  in  various  ways  the  people  do  not  like.    We 


Bk.  II  Practical  Socialism  605 

forbid  the  sale  of  their  securities  —  they  change  them  into  transfers 
on  the  books.  We  suppress  the  companies  —  and  the  people  say  that  a 
great  deal  of  money  was  made  in  certain  quarters  during  the  process. 
Speculation  in  our  new  paper  is  spreading  hke  wildfire  everywhere. 
If  we  support  its  value,  speculation  will  continue.  If  we  merge  it  in 
the  old  debt,  it  will  all  fall  in  a  dead  weight  to  the  level  of  our  paper 
money  and  we  will  never  be  able  to  raise  any  more  funds.  Something 
must  be  done.  We  shut  up  the  Exchange  —  and  speculation  continues 
in  a  thousand  places  instead  of  in  one.  The  people  say  that  enormous 
sums  were  realized  in  certain  quarters  about  that  time.  However,  we 
must  now  turn  our  attention  to  other  matters. 

Military  operations  are  constantly  gaining  in  importance.  The 
enemies  of  the  people  are  gathering  on  every  side.  It  takes  a  strong 
man  at  the  head  of  the  armies  of  the  people.  Our  young  captain  of 
artillery  has  become  a  great  general  long  ago.  He  knows  how  to  spread 
his  troops  over  the  critical  surface  in  a  campaign  and  how  to  concentrate 
them  at  the  critical  point  in  a  battle.  He  knows  how  to  handle  generals 
of  di\dsion  in  council  and  an  army  corps  in  action.  We  make  him  general- 
in-chief  of  the  national  forces.  The  people  are  delighted,  they  call  him 
the  "saviour  of  the  people,"  they  call  us  tyrants  and  oppressors.  However, 
matters  are  becoming  more  settled,  thanks  to  the  influence  of  a  general- 
in-chief,  and  the  people  turn  to  us  and  ask  when  we  are  going  to  divide 
the  wealth  of  the  rich.  Something  must  be  done.  The  strong  hand  of 
the  general-in-chief  has  checked  confusion  so  that  we  can  really  get  to 
work  at  last  with  our  distribution. 

We  hold  an  important  conference  with  the  Minister  of  Finance.  He 
says  the  proper  and  practical  way  to  distribute  the  wealth  of  the  rich  is 
as  follows:  "The  Administration,"  he  begins  as  usual,  "is  in  possession 
of  great  resources,  the  value  of  which  it  is  impossible  to  realize  at  the 
present  moment.  We  have,  however,  already  anticipated  this  value 
in  our  paper  circulation.  The  people  thus  hold  the  wealth  in  solution, 
as  it  were;  all  we  have  to  do,  in  order  to  give  it  to  them  actually,  is  to  dis- 
pose of  the  national  properties  to  them  in  return  for  our  paper,  and 
destroy  the  paper  as  it  comes  back  into  the  treasury.  This  is  a  splendid 
idea.  Why  had  we  never  thought  of  it?  Matters  are  now  beginning  to 
take  on  a  really  practical  and  businesslike  form,  and  we  turn  all  our  atten- 
tion to  disposing  of  the  national  wealth  to  the  people  in  return  for  our 
paper  money.  At  this  juncture  the  people  have  the  millions  and  we 
have  the  property;  all  that  is  necessary  is  to  make  the  exchange.    Prac- 


6o6  Political  Practice  Pt.  V 

tical  finance  is  not  so  difficult  after  all;  a  child  can  understand  it.  The 
only  difficulty  is  that  the  millions  are  on  paper  and  not  worth  anything 
when  they  come  back  to  us,  and  the  national  properties  are  unproductive 
and  not  worth  anything  when  the  people  get  them.  However,  we  have 
no  time  to  waste  on  such  visionary  and  theoretical  considerations:  we 
are  practical  men. 

We  put  the  former  values  on  the  properties  and  offer  them  to  the 
people:  no  bids,  no  buyers.  We  offer  to  accept  payment  in  yearly  in- 
stallments: no  bids,  no  buyers.  We  offer  to  accept  payment,  part  in 
specie  and  part  in  the  certificates  already  issued  on  the  properties:  no 
response.  We  offer  to  accept  all  inscriptions  in  the  "Great  Book"  for 
half  the  amount  of  the  sales.  We  offer  to  accept  taxes  on  the  properties 
half  in  kind  and  half  in  money.  We  anticipate  sales  by  bills  to  contractors 
who  can  deal  with  prospective  purchasers.  We  offer  to  dispose  of  the 
properties  on  mere  verbal  agreements.  We  put  them  up  at  auction. 
A  small  amount  of  the  national  properties  are  disposed  of  in  this  way. 
The  people  say  that  a  great  deal  of  money  was  realized  by  certain  individ- 
uals in  control  about  this  time.  However,  we  must  turn  our  attention 
to  other  methods  if  the  people  will  not  buy  the  properties  from  us. 

"If  the  people  will  not  take  the  properties,"  says  the  Minister  of 
Finance,  "there  is  but  one  thing  to  do  —  force  the  people  to  take  them." 
The  way  to  do  this  is  obvious:  All  that  is  necessary  is  to  inaugurate  a 
system  of  loans  based  upon  the  national  properties;  loans  to  be  partly 
voluntary  and  partly  forced.  By  means  of  these  loans  the  people  will 
have  to  take  the  properties  whether  they  want  them  or  not.  What 
could  be  simpler?  At  last  we  have  really  found  a  way  to  distribute  the 
wealth  of  the  rich.  All  we  have  to  do  is  to  force  the  wealth  out  of  the 
hands  of  the  rich;  anticipate  its  value  in  paper  money,  assign  it  as  it 
were,  to  the  people,  force  the  people  to  take  the  paper  money  and  then 
force  them  to  take  the  property  in  exchange  for  the  paper  money.  Prac- 
tical finance  is  a  beautiful  thing,  and  now  we  can  get  the  work  on  a 
practical  basis. 

First  we  open  volimtary  subscriptions  for  loans  against  the  national 
properties.  Next  we  require  every  individual  in  the  country  to  return 
the  condition  of  his  finances.  A  board  of  examiners  is  appointed  in 
each  locality  familiar  with  local  affairs,  empowered  to  double  estimates, 
if  they  doubt  the  truth.  We  then  assess  all  property  above  an  amount 
essential  for  sustenance  in  a  progressively  cumulative  system.  This 
wise  measure  will  cut  the  heart  out  of  the  wealth  of  the  people,  and 


Bk.  II  Practical  Socialism  607 

retire  millions  of  paper,  but  millions  still  remain.  The  city  must  be 
fed,  or  the  red  spectre  will  flare  up  in  fury.  We  are  forced  to  buy  enor- 
mous quantities  of  provisions  and  to  sell  them  to  the  people  at  a  loss. 
Military  operations  demand  more  money  at  every  step.  We  must  meet 
these  demands  with  paper  or  we  cannot  meet  them  at  all.  Our  paper 
is  sagging  heavily  everywhere.  The  lower  it  goes,  the  faster  it  comes 
out;  the  faster  it  comes  out,  the  lower  it  goes;  and  the  lower  it  goes,  the 
faster  it  comes  out:  down,  down,  down.  However,  we  must  now  turn 
our  attention  to  other  matters. 

Army  and  administrative  affairs  are  not  looking  bright  as  our  paper 
falls.  Officers,  officials,  and  members  of  the  government  are  imable  to 
live  on  their  salaries  as  the  paper  goes  out  of  sight.  All  our  different 
kinds  of  paper  are  sagging  everywhere.  The  ranks  of  the  armies  are 
not  filled  up  as  readily  as  before;  the  soldiers  are  not  properly  fed  or 
clothed.  We  force  the  most  rigid  conscription,  but  the  conscripts  have 
to  be  fed  and  clothed.  We  hear  of  mutinies  in  the  armies  here  and  there. 
Something  will  have  to  be  done;  something  practical.  Our  paper 
scarcely  has  any  market  at  all. 

We  begin  to  cancel  obligations  in  one  fourth  specie  and  three  fourths  in 
bills  on  the  national  properties.  We  issue  new  bills  with  various  forms 
of  specie  support  or  no  one  will  take  them.  We  issue  new  forms  of 
orders  on  the  different  treasuries.  We  appoint  a  special  commission  of 
finance,  and  empower  its  members  to  raise  money  on  their  own  respon- 
sibility. The  needs  of  the  army  demand  enormous  sums  and  men  with 
real  money  to  handle  the  contracts.  The  men  vdih  the  real  money  are 
on  hand.  There  are  now  three  standards  of  value  in  the  country:  specie, 
provisions,  and  our  paper,  which  is  rapidly  falling  out  of  sight.  The 
men  ^\•ith  the  real  money  must  handle  the  great  contracts  for  the  armies. 
Ovir  paper  will  not  do  it.  These  men  have  certain  opinions  with  ref- 
erence to  the  relation  of  the  values  in  which  they  will  do  business. 
These  are  the  rich  and  powerful  men  of  the  country;  we  will  do  business 
upon  their  basis  or  there  will  be  no  business  done.  We  must  protect 
the  people  from  the  tyrants  and  oppressors.  The  more  we  protect  the 
people,  the  more  business  we  do,  and  the  more  business  we  do  the  richer 
and  more  powerful  these  men  become,  and  the  lower  our  paper  falls  on 
the  Exchanges.  Some  of  these  men  are  elected  to  the  Assembly,  they 
are  all  naturally  represented  in  the  Assembly,  the  people  say  that  great 
fortunes  are  made  out  of  the  Assembly.  Things  are  beginning  to  change; 
our  decrees  are  not  met  with  the  enthusiasm  they  once  inspired.    The 


6o8  Political  Practice  Pt.  V 

rich  and  powerful  men  are  felt  everywhere.  The  men  upon  whom  we 
have  forced  the  national  properties  wish  to  get  to  work  and  develop 
them.  They  require  a  sound  financial  basis  in  order  to  do  so;  they  ofier 
employment  to  the  people  on  such  conditions.  The  people  do  not  want 
our  paper.  We  issue  a  decree  establishing  all  values  upon  a  specie 
basis.  We  must  meet  our  expenses  with  specie.  Interest  must  be  paid 
upon  our  obligations  in  specie.  The  speculators  and  the  big  con- 
tractors say  we  will  not  last  much  longer.  We  begin  to  pay  part  of  our 
obligations  in  specie  and  to  cancel  the  principal  by  handing  over  the 
national  properties  to  the  creditors.  The  people  say  that  a  great  deal 
of  money  was  lost  by  the  creditors  of  the  government,  although  some 
very  large  fortunes  accumulated  about  this  time.  The  speculators  say 
we  are  bankrupt.  However,  we  must  now  turn  our  attention  to  other 
matters. 

We  must  provide  for  the  troops  or  the  people  will  be  handed  over  to 
the  tyrants  and  oppressors,  and  we  will  never  be  able  to  distribute  the 
wealth  of  the  rich  to  them.  The  troops  must  be  kept  in  the  field  in 
order  to  protect  the  people.  It  takes  money  to  keep  troops  in  the  field. 
The  troops  are  waiting  outside  the  doors  of  the  Assembly  with  the 
general-in-chief     at     their     head.     Money  =  provisions  =  troops.     No 

money  =  no  provisions  =  no the  door  opens,  the  shadow  of    the 

Sword  falls  over  the  Assembly,  and  the  upshot  of  the  matter  is  that  the 
people,  in  the  form  of  a  brave  and  loyal  army,  turn  the  people,  in  the  form 
of  the  national  representation,  out  of  doors.  The  Sword  enters  into 
possession.  The  nation  has  swung  round  in  one  of  the  inevitable  rings , 
of  forced  political  society,  and  we  never  have  found  the  wealth  of  the  rich 
to  distribute  to  the  people.  The  man  with  a  Sword  is  in  possession.  All 
the  wealth  and  power  in  the  country  are  with  him,  the  people  are  with 
him,  they  are  tired  of  the  confusion,  sick  of  us  and  our  paper  money 
and  the  whole  thing  is  back  again  at  the  starting-point  with  a  rich  class, 
a  poor  class, private  property,  and  indirect  taxes.  Our  forced  paper  money 
has  disintegrated  the  society  into  new  elements  as  would  an  acid.  It  has 
cut  the  social  fluid,  as  it  were,  and  precipitated  a  new  rich  class  in  place 
of  the  old  one.  The  new  rich  class  has  the  money  to  control  the  taxes, 
pay  the  army,  and  employ  the  people  —  and  we  may  as  well  resign  our 
position  as  chairman  of  the  Assembly  as  gracefully  as  possible  and  see 
if  we  can  get  a  commission  on  the  Emperor's  guard.  We  have 
simply  been  pumping  water  into  a  sieve;  we  have  been  flounder- 
ing round  in  a  ring  in  a  quicksand;  we  have  been  floating  through 


Bk.  II  Practical  Socialism  609 

a  society  in  a  paper  parachute  and  we  may  as  well  walk  home  when 
it  touches  the  earth. 

There  is  nothing  imaginary  about  these  situations.  Every  position 
met  is  a  real  position;  every  difficulty  faced  is  a  real  difficulty;  every  de- 
cree suggested,  a  real  decree;  every  expedient  a  real  expedient  put  to 
the  test  of  fact,  with  real  flesh  and  real  blood;  real  guns  and  real  money. 
The  man  who  knows  how  to  follow  them  knows  that  they  present  actual 
conditions,  every  one ;  that  they  are  but  a  crude  analysis  of  the  financial 
history  of  France  for  a  hundred  years.  ^  He  knows  that  the  ghosts  of 
John  Law  and  the  Regent  have  been  ffitting  across  the  pages.  He  has 
seen  the  new  regime  repeating  the  errors  of  the  old.  He  has  heard 
faint  echoes  of  the  voices  of  Mirabeau  and  Marat;  of  the  Jacobins  and 
the  Montagnards.  He  has  seen  LeBon  touring  the  provinces  with  his 
guillotine.  He  has  seen  Carrier  at  work,  scuttling  his  hulks  loaded  with 
human  freight  on  the  Loire.  He  has  seen  the  head  of  the  red  spectre 
behind  the  barricades  of  the  Faubourg  St.  Antoine.  He  has  heard  Danton 
and  Robespierre  in  the  Assembly,  seen  Hoche,  Pichegru,  and  Moreau 
at  the  head  of  the  Republican  troops.  He  has  recalled  the  names  of 
Babeuf  and  the  Girondins;  he  remembers  the  Chouans  and  la  Vendee, 
Charette  and  Larochejacquelein.  He  remembers  the  story  of  Louis 
Blanc  and  the  national  workshops,  of  the  assignats,  the  territorial  man- 
dates and  every  conceivable  device  of  the  mind  of  man  to  make  a  piece 
of  paper  worth  a  piece  of  gold  without  giving  gold  for  it.  He  has  seen 
Camot  at  work  in  the  war  office,  "organizing  victory,"  Cambon  with 
the  "Great  Book"  in  the  Treasury.  He  has  seen  the  blood  flow  on  the 
Place  de  la  Revolution  and  watched  the  convulsions  through  which  a 
nation  plunges  when  it  cuts  off  its  own  head.  He  has  seen  a  great  people 
helplessly  floimdering  in  a  bloody  morass  until  a  man  on  a  white  stal- 
lion rides  into  the  heart  of  the  action  with  a  park  of  artillery,  a  column 
of  horse,  and  a  whole  nation  behind  him,  to  put  a  stop  to  the  confusion. 
And,  if  he  looks  a  little  farther,  he  sees  the  man  on  horseback  go  through 
identically  the  same  process  with  his  indirect  taxes;  and  the  France  of 
to-day  doing  the  same  thing  with  the  same  means. 

The  French  Revolution  presents  all  the  facts  necessary  for  the  formu- 


'This  statement  may  be  readily  veriSed  by  tracing  the  indexed  word  "Finance"  througli  any  authoritative 
history  of  the  French  Revolution.  That  of  Theirs,  in  Shoberls'  Translation,  tias  been  used  in  the  present 
instance.  The  basis  of  any  other  statement  with  reference  to  this  period  will  be  found  in  Jevons  and  Walker 
on  Money  under  Assignats.  The  decrees  and  statements  with  reference  to  the  National  workshops  will  be 
found  in  A  Policy  of  Free  Exchange,  edited  by  Thomas  Mackay  under  National  Workshops,  by  St* 
'Lot  Strachey.    A  logical  and  not  a  temporal  sequence  has,  of  course,  been  presented  in  the  text. 


6io  Political  Practice  Pt.  V 

lation  of  an  opinion  with  reference  to  the  practical  possibility  of  the 
nationalization  of  wealth  by  force.  Wealth  can  no  more  be  socialized, 
nationalized  or  anything  else  by  force,  than  the  tide  can  be  forced  to 
rise  with  a  toy  pistol  or  a  rosebud  forced  to  bloom  with  a  heavy  armed 
cruiser.  The  wealth  of  the  rich  does  not  consist  in  houses,  lands,  and 
industries;  nor  even  in  the  power  to  control  these  productively;  for  this 
power,  as  a  wealth-creating  factor,  is  dependent  upon  the  consuming 
powers  of  the  people.  To  check  the  existing  flow  of  wealth  through  ex- 
isting channels,  such  as  existing  wages,  securities,  and  earning  powers, 
will  check  the  consuming  capacity  of  the  masses;  and  the  wealth  of  the 
rich  will  vanish  into  thin  air.  It  can  no  more  be  taken  by  force  than 
a  rainbow  can  be  gathered  in  a  net,  and  the  attempt  will  at  once  check  the 
consumption  of  the  nation  by  checking  existing  earnings  and  channels  of 
distribution.  In  other  words,  when  the  SociaHsts  try  wealth  nation- 
alization by  force,  they  will  begin  operations  by  running  a  knife  through 
their  own  throats  and  wind  them  up  by  putting  a  bullet  into  the  back  of 
their  own  heads,  which  is  exactly  what  the  men  of  the  Great  Revolution 
accomplished  after  endless  effort  and  waste  of  blood  and  treasure. 

If  a  man  or  an  industry  is  said  to  be  worth  a  million,  it  does  not  mean 
that  a  thousand  men  can  cut  up  one  or  the  other  and  each  take  a  thou- 
sand. It  does  not  mean  that  they  have  a  cave  full  of  gold  miraculously 
filled,  whatever  is  taken  away.  It  means  that  they  represent  a  certain 
annual  earning  capacity,  and  if  they  are  cut  up,  their  earning  capacity 
will  be  cut  up  with  them,  and  no  one  will  get  any  wealth  at  all.  The 
degree  of  rapidity  with  which  the  circulating  medium  of  any  society  flows 
through  certain  industrial  channels,  or  through  the  possession  of  certain 
individuals,  decides  whether  a  man  is  rich  or  poor.  If  the  flow  of 
money  through  existing  channels  is  stopped,  it  will  stagnate  in  a  few 
pools  and  puddles,  and  the  poor  will  be  worse  off  than  before.  Any 
Administration  which  does  not  recognize  the  richer  classes  as  that  which 
they  are  —  the  trustees  of  the  nation's  wealth  —  will  in  all  likelihood 
never  accomplish  anything  but  get  the  people  into  trouble. 

The  French  Revolution  seized  an  enormous  mass  of  property,  national  ■ 
ized  and  socialized  it  as  well  as  any  such  property  can  be  socialized  in  all 
probability.  The  instant  it  was  seized,  however,  its  value  disappeared; 
it  became  improductive,  not  only  because  State  control  cannot  meet  the 
demands  of  highly  specialized  industry  as  profitably  as  individual 
control,  but  because  the  markets,  essential  to  the  support  of  the  indus- 
tries, are  of  necessity  dried  up  through  any  forced  and  convulsive  proc- 


Bk.  II  Practical  Socialism  6ii 

ess  of  expropriation.  The  instant  the  State  seized  the  properties, 
therefore,  it  found  itself  in  possession  of  a  debt  and  a  deficit.  And 
there  is  excellent  reason  to  believe,  when  the  modem  Socialist  State 
goes  into  working  operation,  that  it  will  begin  to  divide  up  the  wealth  of 
the  rich  in  the  forms  of  a  debt  and  a  famine;  and  that  it  will  divide  it  up 
with  paper  money  and  a  guillotine  in  orthodox  Revolutionary  style,  for 
it  will  have  nothing  else  with  which  to  divide  it. 

The  men  of  the  great  Convulsion  have  exhausted  the  subject  of 
coercive  Socialism  for  the  practical  man  who  studies  its  financed  history 
and  analyzes  the  action  of  their  minds  with  the  red  spectre  on  one  side 
and  a  bottomless  pit  on  another.  The  man  who  thinks  he  could  have 
avoided  their  errors  and  done  very  much  better  than  they,  under  the 
same  conditions,  should  study  the  Pit  and  the  Spectre  again. 

All  such  attempts  at  social  amelioration,  by  means  of  the  expropria- 
tion of  one  class  for  the  benefit  of  another,  always  have  had,  and 
in  all  hkelihood,  always  will  have,  but  one  result.  The  force  will  cut  the 
society  into  antagonistic  elements;  these  elements  will  writhe  with  each 
other  in  the  death  throes  for  the  control  of  the  force,  with  the  result 
that  the  man  who,  with  map,  compass,  and  scale,  can  plan  the  most 
effective  military  campaign;  the  man  who  can  hold  the  clearest  military 
ensemble  in  his  mind,  at  the  head  of  an  army  in  action,  will  be  the  man 
who  dictates  the  conditions  of  the  surviving  society  —  Marius,  Sulla, 
Caesar,  Cromwell,  Bonaparte.  In  other  words,  he  will  bring  the  disin- 
tegrated society  back  to  the  condition  of  a  highly  centralized  society, 
found  a  dictatorship,  a  dynasty  or  an  exploding"  Aristocracy,  and 
lay  all  the  essential  foundations  for  another  disintegration,  which 
process  seems  to  present  the  salient  elements^  of  "practical"  political 
history. 

But  it  would  be  no  such  easy  matter  to  attempt  to  "socialize"  the 
wealth  of  a  great  nation  as  has  been  supposed.  To  reproduce  such  a 
suddenly  successful  revolution  as  that  of  France  would  require  a  union 
of  the  great  majority  of  the  people  to  begin  with.  Such  union  is,  however, 
rarely  found  at  the  beginning  of  any  such  movement;  the  result  would  be 
civil  war  at  the  start;  civil  war,  moreover,  with  the  bulk  of  the  wealth 
and  intelligence  on  the  side  of  the  existing  government,  which  would, 
in  addition,  possess  the  power  of  absorbing  the  resources  of  the  Socialists 
while  the  war  went  on,  simply  by  controlling  a  few  important  dis- 
tributive centres.  But,  even  if  the  Socialists  win  the  day,  and  find 
themselves  in  possession  of  an  enormous  debt,  an  exhausted  treasury. 


6i2  Political  Practice  Pt.  V 

and  the  productive  powers  of  a  people  distorted  and  destroyed  by 
war,  the  outlook  for  coercive  Socialism  will  awake  little  enthusiasm  in 
a  mind  familiar  with  practical  affairs. 

The  Socialists  may,  of  course,  repudiate  the  debt;  but  what  about  the 
treasury  and  the  earning  powers,  with  a  prostrate  people,  and  credit  and 
confidence  destroyed  by  the  repudiation  of  national  obligations,  upon 
which  enormous  financial  interests  with  incalculable  ramifications  de- 
pend? Such  repudiation  would  be  analogous  to  looting  the  banks  and 
institutions  of  trust;  the  beauties  of  which  have  already  been  examined. 
There  can  be  but  one  answer  to  such  a  question,  "practically."  The 
rings  of  the  French  Revolution,  taxes,  gunpowder,  and  paper  money: 
the  Pit  and  the  Spectre  again.  Destroy  existing  channels  of  distribution, 
and  the  Spectre  will  appear  in  a  moment;  check  existing  earning  powers 
ever  so  slightly,  and  the  Pit  will  begin  to  yawn.  There  will  be  nothing 
for  the  Socialists  to  do  but  pour  shrapnel  into  one,  and  paper  into  the 
other,  imtil  the  paper  crumbles  away  beneath  them  and  the  shrapnel 
begins  to  fall  on  their  own  heads.  The  future  of  the  Socialist  State, 
after  a  successful  revolution,  looks  even  bleaker  than  with  a  perpetual 
mortgage  gnawing  at  its  vitals;  and  that,  whether  it  elects  to  pay  its 
debts  or  not. 

The  essential  element  of  administrative  vitality  is  money;  a  steel-clad 
battleship  is  but  a  hulk  without  a  piece  of  gold  in  her  cylinders.  The 
Socialist  State  will  last  only  as  long  as  it  can  control  the  necessary  means. 
If  ever  a  people  return  a  Socialistic  legislature  to  power,  these  men,  in 
order  to  realize  their  policy,  will  find  themselves  face  to  face  with  the 
inevitable  problem  —  funds.  If  they  decide  to  buy  the  sources  of 
production,  they  will  have  to  get  the  money,  and  where  can  they  get  it 
except  through  paper  issues?  If  they  adopt  a  policy  of  forced  expro- 
priation existing  powers  of  earning  and  consumption  will  dry  up  in  a 
flash;  they  will  be  worse  off  than  before.  They  will  have  but  one  re- 
source in  either  case;  they  will  begin  to  do  exactly  what  all  other  legis- 
latures would  do  in  the  same  position  —  they  will  force  paper,  in  order 
to  keep  themselves  alive,  and  when  their  paper  falls  to  nothing  they  will 
have  no  power  left.  If  they  do  not  force  their  paper,  they  may  not 
live  a  year.  If  they  do  force  their  paper,  they  will  undermine  their  own 
support.  Taxes  and  paper,  taxes  and  paper  —  without  these,  no 
Socialist  legislature  can  wield  administrative  power;  with  these,  the 
Socialist  legislature  will  reproduce  identically  the  same  phenomena 
■which  all  other  legislatures  have  reproduced  since  political  taxes  and 


Bk.  II  Practical  Socialism  613 

paper  came  into  existence.      They  will  destroy  themselves  with  their 
own  weapons. 

There  are  excellent  elements  in  Socialism,  regarded  as  an  ethical  ab- 
straction; there  can  however  be  but  little  hope  for  it,  as  a  specific  admin- 
istrative system,  so  long  as  an  indirect  tax  exists.  The  wealth  which 
SociaHsm  wishes  to  distribute  depends  upon  the  tax;  take  off  the  tax 
the  wealth  will  vanish.  Keep  on  the  tax,  Sociahsm  will  be  distributing 
taxes,  and  will  have  to  do  it  with  paper  money.  Under  such  conditions, 
Socialism  is  but  the  old  treadmill.  If  enough  votes  are  ever  united  to 
attempt  the  sociaHstic  administration  of  the  wealth  of  a  nation,  Socialism 
will,  in  all  Hkelihood,  discover  that  it  has  a  white  elephant  on  its  hands 
and  one  that  seems  a  very  different  elephant  in  the  control  of  its  new 
owners.  Will  Socialism  recognize  the  obligations  of  the  existing  admin- 
istration? If  so.  Socialism  will  pile  a  complicated  burden  upon  its 
already  hopeless  encumbrances.  Will  Socialism  repudiate  these?  If 
so,  it  will  xmdermine  the  financial  and  industrial  structure  of  the  society 
and  a  bloody  chaos  will  probably  result.  Will  it  adopt  some  intermediate 
course?  In  such  a  case  the  outcome  in  its  effects  upon  values  would 
probably  be  confusion  worse  confounded.  The  Socialist  elephant  would 
begin  to  show  signs  of  immediate  collapse,  irrespective  of  the  method  of 
his  capture.  He  could  only  be  kept  alive,  in  any  event,  by  constantly 
pumping  paper  and  taxes  into  his  limgs  \\ith  great  effort  and  expense; 
and  the  pump  could  be  kept  at  work  but  by  periodic  explosions  of  gun- 
powder in  the  cylinders  of  the  Socialist  State,  very  much  like  the  explo- 
sions of  an  electric  spark  in  a  gas  engine  —  which  is  exactly  what  is  being 
done  to-day. 

The  practical  man  who  understands  what  existing  Administrations  are 
doing  with  their  taxes  on  the  necessaries  of  life  will  not  doubt  that  the 
future  belongs  to  the  Revolution.  Existing  Governments  themselves  are 
the  real  revolutionary  forces.  The  question  seems  to  be  in  no  sense 
whether  the  Revolution  will  occur  or  not;  but  what  form  will  it  take? 
When  existing  Governments  have  congested  the  wealth  under  their 
control,  within  such  narrow  limits  that  the  expropriated  mass  wields 
the  balance  of  power,  existing  Governments  will  become  'Sisionary";  just 
as  did  the  Governments  of  the  Roman  Senate,the  Stewarts, the  Bourbons, 
and  the  Bonapartes,  each  of  which,  in  its  day,  was  among  the  greatest 
"practical"  forces  in  the  world.  Those  forces  which  might  be  roughly 
grouped  under  the  general  heading  of  Socialism  are,  in  all  likelihood, 


6i4  Political  Practice  Pt.  V 

the  most  influential  and  eSectively  organized  in  the  anti-governmental 
field  at  present.  The  leaders  of  these  forces  will  probably  exert  influence 
of  no  little  political  importance  in  the  not  distant  future.  It  might  be 
said  that  they  already  exert  such  influence.  Yet,  if  this  leadership  is 
ever  to  take  its  place  among  the  practical  and  advantageous  social 
factors,  it  may  seem  that  it  should  study  the  vital  relation  of  a  national 
credit  and  fiduciary  system  to  the  sources  of  wealth  production  of  which 
Socialism  wishes  to  gain  control,  and  realize  that  the  instant  that  system 
is  endangered,  those  sources  of  wealth  production  will  dry  up.  So- 
cialist leaders  should  recognize  that  these  sources  can  neither  be  pur- 
chased nor  appropriated  without  great  financial  resources;  and  then  they 
should  turn  their  attention  to  the  practical  history  of  irredeemable  paper 
money. 


CHAPTER  III 

FISCAL    MECHANICS 

THE  greatest  force  in  the  political  world  is  what  might  be  called 
fiscal  force.    The  solution  of  a  problem  in  fiscal  mechanics, 
therefore,  demands  the  scientific  application  of  fiscal  force 
to  administrative  machinery.    The  present  problem  may  be 
stated  as  follows: 

The  indirect  tax  seems  to  be  a  dangerous  political  disease.  But  if 
the  tax  is  abolished,  the  solvency  of  every  institution  of  trust  will  be  en- 
dangered, and  financial  and  industrial  chaos  result.  The  difiiculty  lies 
in  the  vaults  of  the  banks  and  fiduciary  institutions  in  the  form  of  cor- 
porate earning  powers  dependent  upon  indirect  fiscal  systems.  There  is 
not  a  tax  on  an  indirect  schedule  which  does  not  affect  the  value  of  securi- 
ties either  immediately  or  remotely.  These  securities  are  deposited  in 
trust  of  banks  and  financial  institutions  and  these  have  lent  the  savings 
of  the  people  upon  the  values  represented.  The  value  of  these  securities 
is  the  basis  upon  which  the  savings  depend.  This  value  is  only  main- 
tained by  the  payment  of  the  interest,  dividends,  and  obligations,  which 
the  securities  involve.  These  securities  must  be  annually  inflated,  as  it 
were,  to  be  kept  alive,  and  the  only  way  of  inflating  them  is  to  continue 
the  existing  earning  powers  of  the  corporations  represented  —  in  other 
words,  by  keeping  the  taxes  on.  Take  the  taxes  off,  the  earning 
powers  cease,  the  securities  cannot  be  annually  inflated  and  become  so 
much  waste  paper;  the  institutions  close  their  doors,  and  the  savings  of 
the  people  disappear.  These  pieces  of  paper  might  be  likened  to  the 
lungs  or  the  heart  of  the  nation.  It  is  only  through  their  annual 
inflation,  or  pulsation,  that  the  blood  of  the  nation  —  its  money  —  is 
kept  in  circulation.  The  periodic  pulsations  of  those  pieces  of  paper 
is  as  essential  to  the  industrial  life  of  the  people,  as  the  pulsations  of  his 
heart  to  the  life  of  a  man.  Affect  these  securities  adversely  and  the 
heart  of  the  people  stops  beating. 

Like  everything  else,  however,  indirect  schedules  may  be  examined 
from  different  points  of  view.  The  essentials  for  another  examination 
are  supplied  by  the  foUowing:     (i)     Existing  taxes.     (2)    Domestic 

61S 


6i6  Political  Practice  Pt.  V 

prices.  (3)  Foreign  prices.  (4)  Capitalization  and  security  values 
of  industries  affected. 

With  this  material  at  hand,  the  taxes  of  any  indirect  system  may  be 
classified  in  different  ways.  By  means  of  the  comparison  of  home  and 
foreign  prices,  the  purely  diplomatic,  or  weapon-taxes,  may  be  sifted  from 
other  taxes.  The  effect  of  these  upon  security  values  could  then  be 
studied.  The  protective  taxes  could  next  be  grouped  and  divided  into 
different  classes.  Those  raising  prices,  without  being  necessary  to  protect, 
might  be  examined.  How  do  these  taxes  affect  the  securities  and  earn- 
ings involved?  Financial  institutions  in  general?  Specific  institution? 
Individuals?     Capitalization?     Earning  power? 

Again,  a  comparison  of  foreign  and  domestic  prices  will  make  it 
possible  to  select  another  class  of  taxes  which,  through  their  effect  on 
running  expenses,  raw  material,  package,  and  so  forth,  bring  indirect 
influences  into  existence  not  at  first  expected.  What  are  these  influences? 
Do  they  check  productive  and  earning  capacity  in  some  of  the  industries 
affected?  Do  they  increase  running  expenses  and,  consequently,  de- 
press the  value  of  securities?  Which  securities?  How?  How  much? 
What  would  be  the  increased  earning  power  of  the  industries  affected 
if  the  tax  were  repealed?  How  much  could  the  value  of  their  securities 
be  increased  by  the  removal  of  any  given  tax?  By  the  removal  of 
another  tax? 

Taxes  which  prohibit  the  importation  of  the  raw  material  of  industry 
must  suppress  domestic  industry.  These  taxes  can  be  classified.  They 
will  point  to  certain  industrial  possibilities  and  certain  latent  earning 
powers.  Can  these  be  organized  for  the  purpose  of  the  repeal  of  the  tax? 
What  capital  would  they  employ?  Labour?  Earning  power  and 
security  values?  How  would  existing  securities  be  affected?  Depressed? 
Inflated? 

Excise  and  im.port  schedules  could  be  studied  singly  and  combined  for 
the  purpose  of  classifying  taxes  which  suppressed  markets  at  home  and 
abroad.  Possible  relative  value  of  these  markets,  if  developed  with 
reference  to  the  value  of  existing  securities?  Earning  power  and  security 
value  of  these  taxes  on?  Off?  Possibility  of  organizing  adversely 
affected  industries  in  order  to  develop  these  markets  and  earning  powers 
by  removing  the  tax?  Capitalization?  Securities?  Taxes  which 
vitally  affect  fiduciary  institutions.  How?  How  much?  Favourably? 
Adversely?  Comparison  of  net  gain  or  loss  with  the  tax  on?  With  the 
tax  off?    Taxes  which  affect  the  fixed  charges  and  extension  of  railways. 


Bk.  II  Fiscal  Mechanics  617 

Adversely?  Favourably?  Net  gain  or  loss  occasioned  in  the  value  of 
the  securities  affected  by  the  tax? 

Taxes  which  affect  one  area  and  increase  its  productive  power.  Taxes 
which  affect  other  areas  and  decrease  their  productive  power.  Relative 
values  of  the  areas  affected  with  the  tax  on?  With  the  tax  off?  Taxes 
which  represent  artificially  inflated  securities  of  enormous  value.  Taxes 
which  suck  the  life  out  of  other  securities  to  an  enormous  extent.  Taxes 
which  stifle  industry.  Taxes  which  strangle  labour.  Taxes  which  blot 
values  out  of  existence.  Which  values?  How  much  are  they  worth? 
Can  they  be  organized?    Incorporated?    Taxes  which  —  but  why  go  on? 

Any  one  can  analyze  these  schedules,  and  if  this  is  done  carefully  and 
dispassionately,  they  may  be  found  to  possess  a  wealth-creating  power  of 
which  the  orthodox  politician  does  not  dream.  This  wealth-creating 
power  does  not  lie  in  increasing  them,  but  in  diminishing  them  systemat- 
ically and  productively.  Every  tax  on  these  schedules  must  hide  a 
market  and  an  earning  power,  or  it  would  never  have  been  put  on;  there 
would  have  been  no  practical  use  in  putting  it  on.  Where  is  the  market? 
What  is  the  earning  power?  How  much  are  they  worth  in  relation  to 
existing  markets  and  existing  earning  powers? 

In  other  words,  every  indirect  tax  in  existence  to-day  suppresses  a 
market  and  an  earning  power  which  could  be  developed  to-morrow  if  the 
tax  were  taken  off  productively.  There  is,  moreover,  reason  for  believe- 
ing  that  the  capitalized  earning  power  of  a  tax  of  is  greater  than  the 
capitalized  earning  power  of  the  tax  on.  There  are,  as  it  were,  more 
valuable  infant  industries,  productive  potentialities,  and  corporate  cer- 
tificates hidden  in  an  indirect  schedule  than  it  brings  into  existence 
to-day;  and  these  values  can  be  developed  but  by  the  repeal  of  the 
taxes.  A  tax  removed  from  a  raw  material,  substance  affecting  package, 
or  running  expenses,  will  apparently  inflate  securities  on  one  side,  if 
done  carefully  and  productively,  to  a  greater  value  than  it  will  depress 
securities  on  another. 

These  potential  values  will,  of  course,  not  be  in  existence  at  any  given 
moment;  it  is,  however,  possible  to  study  them  in  relation  to  the  pro- 
ductive reduction  of  indirect  schedules.  In  other  words,  before  re- 
moving a  tax,  liberating  an  industry  and  inflating  a  security,  to  compare 
the  value  of  the  new  industry  or  the  new  security  with  the  old,  and 
balance  these  in  the  vaults  of  the  institutions. 

It  is  only  by  liberating  strangled  industry  and  stifled  markets,  locked 
in  a  tariff  tax;  only  by  loosening  bonds  binding  unemployed  labour  fast 


6i8  Political  Practice  Pt.  V 

in  an  import  or  excise  duty;  and  in  doing  it  with  real  securities  and  real 
earning  powers,  that  a  nation  can  hope  to  free  itself  from  the  weight 
which  lies  on  its  heart  to-day  and  distorts  its  circulation  by  causing 
artificial  industrial  pulsations.  It  is  only  by  putting  new  corporate 
certificates  in  the  place  of  the  old  that  a  people  may  hope  to  have  any 
practical  or  enduring  reform  in  administrative  affairs.  This  can  be 
done  by  inflating  existing  paper  by  means  of  tax  reduction,  or  by  creat- 
ing new  paper  in  the  same  way.  A  tax  inflates  a  piece  of  paper;  when 
it  is  shown  that  another  piece  of  paper  can  be  inflated  by  taking  the 
tax  off,  and  that  the  second  is  worth  more  than  the  first,  there  may  appear 
to  be  some  practical  basis  for  Free  Trade.  Reason  shows  that  untaxed 
markets  are  worth  more  than  taxed  markets.  The  only  rational  economic 
thought  the  world  has  developed  shows  it;  undisputed  fact  shows  it  in 
every  free  trade  area  in  the  world;  and  when  practical  men  begin  to  ask 
if  it  is  not  so  everywhere,  under  all  conditions,  Protection  will  begin  to 
look  a  little  more  visionary  than  at  present. 

It  is  apparently  a  practical  certainty  that  the  annual  value  of  the 
incorporated  earning  powers  of  a  direct  fiscal  system,  that  is,  the  untaxed 
and  unstifled  industries  and  markets  of  a  people,  is  greater  than  that 
of  an  indirect  fiscal  system;  that  is,  the  taxed  and  stifled  industries  and 
markets  of  a  people. 

Here  all  the  arguments  of  the  protectionist  may  be  reversed  in  his  own 
words.  The  vials  of  Protection  may  be  inverted,  as  it  were,  and  poured 
over  the  protectionist's  own  head;  for  it  is  as  possible,  literally,  to  build 
up  industries  by  taking  taxes  off;  to  "protect"  labour  in  the  same  way; 
to  "create"  a  demand  for  it;  to  "attract"  capital;  to  develop  "productive 
potentialities  and  feed  the  industrial  nursling";  in  practical,  orthodox, 
protectionist  form  by  means  of  the  elimination  of  a  fiscal  burden,  as  it  is 
by  the  imposition  of  such  a  burden. 

Every  advantage,  real  and  imaginary,  of  a  protective  fiscal  system  may 
apparently  be  gained  by  a  people  in  taking  taxes  off,  as  well  as  in  putting 
them  on;  and  this  with  greater  values  to  develop  and  less  danger  and 
expense.  In  other  words,  the  productive  reduction  of  an  indirect  fiscal 
system  contains  all  the  latent  financial  and  industrial  possibilities  of  its 
productive  construction,  and  it  is  worth  more  down  than  it  is  up. 

A  railway  has  been  considered  as  typical  of  existing  industrial  condi- 
tions. The  railway  represents  the  labour  of  a  thousand  men,  one  of 
whom  is  the  owner.  The  thousand  men  produce  a  million  annual  profit, 
all  of  which  goes  to  one  man.    In  actual  fact  the  wage- workers  would  be 


Bk.  II  Fiscal  Mechanics  619 

worse  ofi  than  supposed.  Every  indirect  tax  on  a  necessary  would  be 
taxing  their  wages  out  of  their  pockets  and  creating  a  process  of  accumula- 
tion toward  the  owner.  The  o\\Tier,  again,  through  the  control  of  these 
taxes,  might  form  protected  industrial  organizations  along  his  line  and 
develop  new  forms  of  values.  He  could  then  grant  transportation  priv- 
ileges to  these,  as  against  other  industries,  and  form  still  another  proc- 
ess of  accumulation.  He  could  capitalize  these  industries  and  his  railway 
while  keeping  control  of  them,  and,  by  shifting  a  tax  or  a  rate,  pour 
through  the  Exchanges  another  stream  of  gold  into  his  pockets.  By 
means  of  the  purchase  of  land,  in  relation  to  extensions  and  terminals, 
socially  created  wealth  in  the  form  of  imimproved  land  values  could  be 
absorbed  by  the  owTier  of  the  railway.  The  workers  would  not  only 
have  no  part  in  any  of  these  accumulations  but,  through  the  taxation 
of  living  expenses,  their  wages  would  constantly  be  forced  to  swell  them. 

These  considerations  suggest  a  Socialist  or  a  Syndicalist  policy,  by 
means  of  which  the  earnings  could  be  distributed  to  the  producers  of 
wealth.  The  practical  application  of  any  such  policy  has  been  examined. 
The  enforced  expropriation  of  one  class  for  the  benefit  of  another  has 
never  resulted,  and  can  never  result,  in  anything  but  financial  collapse 
or  civil  war.  It  means  a  bloody  orgie  of  taxes  and  paper  money,  leading 
up  to  a  military  dictatorship.     It  has  been  tried. 

Another  method  of  improving  the  social  conditions  may  be  considered: 
Any  administration  expecting  to  live  should  know  where  to  get  the 
money  to  keep  itself  alive,  and  no  adminstration  can  live  on  paper  money. 
A  railway  has  been  presented  with  an  earning  capacity  of  a  million. 
This  might  represent  a  capitalized  value  of  twenty  millions.  Of  this 
total  value,  however,  only  a  part  will  represent  capital  actually  expended 
in  the  equipment  of  the  road.  If  it  cost  ten  millions  to  build  the  road, 
there  will  be  ten  millions  representing  pure  franchise  value.  The  ten 
millions  spent  on  equipment  belong  to  the  owTier  and  should  not  be 
touched;  the  ten  millions  representing  franchise  value  belong  to  the 
people;  and  this  principle  applied  throughout  the  entire  unimproved  land 
values  of  the  country  suggests  the  sources  from  which  an  administration, 
with  industrial  freedom  for  its  object,  might  support  itself.  Where  these 
land  values  are  turned  into  the  national  treasury,  taxes  on  vital  needs 
may  be  proportionately  repealed.  Wherever  these  taxes  are  repealed, 
the  purchasing  and  sa\'ing  capacity  of  wages  will  be  increased  and  the 
artificially  supported  process  of  accumulation  toward  the  larger  incomes 
will  cease.    The  chances  are  again  that  the  absorption  of  unimproved 


020  Political  Practice  Pt.  V 

land  values  and  untaxed  industry  would  cause  an  increasing  demand 
for  labour.  If  this  is  so,  competition  in  the  labour  market  will  relax 
proportionately  and  wages  rise  actually  as  well  as  relatively.  If  these 
land  values  are  greater  than  administrative  expenses,  the  difference  could 
be  distributed  in  the  form  of  old-age  pensions.  In  this  way  the  people 
could  share  in  the  surplus  social  wealth  they  create. 

This  process,  if  realizable  at  all,  however,  would  require  much  time 
and  care  and  be  fraught  with  very  great  difi&culty  at  every  step.  In 
reality,  no  fixed  line  exists  between  owner  and  worker;  between  capital 
and  labour.  Ownership,  in  actual  fact,  reduces  itself  to  holders  of  indus- 
trial securities  represented  by  the  institutions  of  trust  of  the  country. 
Every  wage- worker  is  an  owner  and  a  capitalist  in  the  narrowest,  as  well 
as  in  the  widest,  sense  of  the  term,  for  the  institutions  have  lent  his 
savings  on  the  industrial  securities  of  the  country;  he  thus  owns  these 
in  a  literal  sense.  If  he  has  no  savings  and  no  employment,  his  interests 
are  still  more  intimately  involved  with  those  of  capital,  for  it  is  but 
through  the  maintenance  of  the  national  industrial  hfe  that  he  can  hope 
for  occupation  and  independence. 

The  first  condition  of  success  would  be  to  assure  and  support  the  land 
privileges  of  the  society;  without  this  the  Administration  would  be 
forced  to  resort  to  unproductive  and  indirect  methods  and  begin  to 
repeat  existing  conditions. 

The  reaching  of  these  values  intelligently  would  again  be  a  difficult 
matter.  The  great  bulk  of  the  socially  created  wealth,  as  well  as  the 
indirect  taxes,  has  been  capitalized  long  ago  and  sold  to  the  people  over 
and  over  again,  through  the  institutions  of  trust.  To  touch  even  a 
pure  site  or  franchise  value  ignorantly  or  violently  may  but  close  the 
doors  of  the  institutions  and  shoot  up  the  level  of  the  unemployed.  It 
would  require  not  only  the  greatest  care  but  the  realization  of  every  value 
to  be  extracted  from  indirect  schedules,  in  order  to  steady  the  institutions 
during  the  process. 

These  are  the  elements  of  the  science  of  fiscal  mechanics  applied  to  the 
liberation  of  industry  and  the  natural  distribution  of  wealth.  All  a  tax 
can  do,  practically,  is  to  divert  a  stream  of  real  money  from  one  direction 
to  another.  It  can  inflate  paper  as  it  goes  up;  it  can  inflate  paper  as 
it  goes  down.  An  indirect  fiscal  system  is  like  a  giant  hammer  in  a  mill 
—  it  can  take  steam  both  ways;  in  the  downward  as  well  as  in  the  upward 
stroke,  and,  under  proper  control,  the  land  of  a  nation  can  generate 
power. 


CHAPTER  IV 

THE  FISCAL  CLEARING  HOUSE 

INQUIRY  into  fiscal  and  economic  conditions  seems  but  to  develop 
a  dangerous  disease  in  the  body  politic  on  one  side,  and  a  dangerous 
operation  on  another.  The  practical  man,  the  man  who  deals 
wdth  conditions,  will  have  little  interest  in  the  various  suggestions 
of  administrative  reform  before  the  public  to-day.  The  difl&culty  lies 
in  the  vaults  of  the  great  institutions  of  trust  of  London,  Paris,  and 
Berlin,  in  the  form  of  pieces  of  paper  representing  industrial  earning 
powers.  Those  pieces  of  paper  control  the  situation,  nothing  else  does. 
If  the  bulk  of  those  pieces  of  paper  can  be  kept  throbbing  with  strong 
and  regular  pulsations,  questions  of  administrative  and  political  reorgan- 
ization might  be  advantageously  considered  —  not  otherwise.  To  allow 
the  pulsations  of  those  pieces  of  paper  to  cease  for  a  moment  means 
a  bloody  collapse;  to  keep  them  pulsating  during  any  period  of  radical 
readjustment  may  be  impossible  and  would  require  a  fiscal  operation  of 
the  most  serious  nature. 

The  disease  from  which  the  patient  is  sujffering  is  the  indirect  taxation 
of  his  vital  requirements.  The  operation  would  consist  in  cutting  out 
these  taxes  and  putting  natural  blood  and  oxygen  in  their  places.  The 
patient  will,  apparently,  have  to  put  himself  voluntarily  on  the  operating 
table  and  have  his  indirect  taxes  cut  out  if  he  wants  to  get  well.  If  he 
does  not  care  to  do  this,  he  will  probably  go  into  convulsions  later  on. 
The  symptoms  of  his  disease  are  nearly  always  the  same  and  repeat 
themselves  through  one  administration  after  another:  A  ring  of  indirect 
taxes,  youthful  exuberance  and  progress  for  a  time;  protectionism, 
militarism,  imperialism  and  great  patriotic  enthusiasm,  followed  by 
increased  indirect  taxationism.  A  strong,  steady  and  progressively  in- 
creasing flow  of  gold  to  the  brain;  plutocratism,  pauperism,  unemploy- 
mentism.  The  gold  congests  in  certain  veins  and  arteries  with  great 
force;  paralysis  in  the  extremities,  demagogism,  socialism,  anarchism, 
class-antagonism,  and  revolutionism.  Death  in  convulsions  is  the  usual 
result. 

On  the  other  hand,  if  he  submits  to  an  operation,  there  may  be  a 

621 


622  Political  Practice  Pt.  V 

slight  chance  of  recovery.  It  must  be  admitted,  however,  that  the 
operation  is  a  dangerous  one  —  viciously  dangerous  —  but  the  better 
the  patient  understands  the  danger,  the  greater  the  chance  of  recovery, 
and  the  less  the  risk  of  cutting  his  own  throat.  A  study  of  the  eSects 
of  indirect  burdens  on  consumption,  in  the  suppression  of  markets,  and 
depreciation  of  security  values  in  various  ways,  suggests  that  the  possi- 
bility may  exist  for  the  practical  solution  of  problems  dealing  with  the 
distribution  of  wealth  facing  the  more  important  national  Adminis- 
trations to-day.  The  existence  of  such  a  possibility,  however,  and 
its  realization  are  two  very  different  things;  its  realization  may  be  beyond 
the  range  of  the  attainable.  The  different  populations  of  the  world  have 
tangled  themselves  up  in  a  golden  net  of  their  own  weaving.  They  cannot 
break  its  meshes.  If  they  try,  the  cords  will  but  sink  deeper  into  their 
flesh.  If  they  did  break  them,  they  would  not  be  able  to  stand  up. 
The  only  hope  lies  in  trying  to  untwist  the  tangles  and  loosen  the  golden 
chains. 

If  any  population  ever  begins  to  understand  what  it  is  doing  with  its 
indirect  schedules,  and  attempts  to  free  itself  from  these,  a  grave  danger 
will  arise  involving  the  industrial  and  financial  life  of  the  nation  through 
its  institutions  of  trust.  A  single  effective  organization  of  these  insti- 
tutions, therefore,  would  be  necessary,  if  this  danger  is  to  be  avoided. 
An  organization  of  this  kind  would  act  as  a  fiscal  Clearing  House,  its 
object  being  to  examine  and  pronounce  upon  tax  reductions  with  ref- 
erence to  their  effects  upon  its  members.  It  could  block  dangerous 
reductions  on  one  side,  and  act  as  an  incentive  to  productive  reductions 
on  another.  It  could  serve  to  balance  loss  and  gain  in  every  institution 
in  the  country.  With  such  a  fiscal  Clearing  House  system,  thoroughly 
organized  for  the  protection  of  every  financial  institution  affected,  and, 
if  the  people  began  to  see  the  values  locked  up  in  their  indirect  schedules, 
it  might  be  possible  to  liberate  these  earning  powers  without  throwing 
the  nation  into  convulsions  or  an  indefinite  stroke  of  paralysis. 

The  value  of  such  an  institution  would  depend  upon  the  ability  of 
practical  men,  representing  specific  industries,  to  understand  and  esti- 
mate to  what  extent  certain  taxes  of  an  indirect  system  must  cut  into 
their  earnings  and  strangle  their  markets  if  these  taxes  inflate  earnings 
and  protect  markets  on  another  side.  A  tax  can  but  turn  a  real  stream  of 
real  money  from  one  direction  into  another.  Everything  would  depend, 
therefore,  upon  the  relative  values  of  these  two  streams.  If  the  untaxed 
stream  on  money  is  not  greater  than  the  taxed  stream,  the  repeal  of  the 


Bk.  II  The  Fiscal  Clearing  House  623 

taxes  might  be  dangerous.  If,  on  the  other  hand,  the  repeal  of  a  tax 
liberated  a  stream  of  earning  powers  greater  than  those  it  congested, 
and  these  two  streams  were  controlled  through  a  single  institution,  the 
repeal  of  the  tax  would  increase  the  wealth  of  the  country  and  involve  no 
dif&culty, 

A  fiscal  Clearing  House,  properly  controlled,  might  perform  the  opera- 
tion of  indirect  tax  excision  without  too  great  danger.  It  would  be 
able  to  keep  the  nation's  heart  beating  on  one  side,  and  to  force  stronger 
and  steadier  industrial  pulsations  on  another.  With  every  institution 
of  trust  sound  and  strong,  the  heart  action  of  the  nation  would  not  be 
endangered;  and  every  tax  repealed  would  cause  the  blood  to  flow  that 
much  farther  and  swifter  through  the  body  politic. 

Such  a  Clearing  House  would  know,  as  long  as  it  held  the  institutions 
of  trust  in  a  solvent  condition,  that  every  explosion  would  take  place 
regularly  in  the  industrial  cylinders,  every  pay  roll  would  be  met;  every 
wage  would  be  paid,  every  obligation  which  kept  the  people  financially 
alive  would  be  honoured.  It  would  know,  with  these  institutions  solvent, 
that  the  heartbeats  of  the  nation  were  assured,  that  the  savings  and  the 
treasure  of  the  people  were  safe ;  and  it  would  be  able  to  pay  little  attention 
to  anything  else.  When  the  last  tax  was  taken  off,  and  turned  into  good 
securities  in  the  vaults  of  the  banks  and  trust  companies,  these  securities 
would  be  inflated  with  natural  instead  of  artificial  values;  the  lungs  of 
the  nation  would  be  filled  with  pure  oxygen  instead  of  with  taxes  and 
gunpowder  as  at  present,  and  the  pulsations  of  its  heart  would  throw 
its  blood  into  natural  and  not  into  artificially  congested  channels. 
When  this  was  accomplished,  when  every  protective  tax  was  removed, 
when  every  revenue  tax  as  it  came  off  naturally  and  productively,  and 
not  before,  was  assessed  upon  socially  created  wealth,  in  the  form  of 
land  and  franchise  values,  when  every  franc  or  dollar  was  so  placed, 
such  an  institution  would  have  fulfilled  the  purpose  of  its  existence,  its 
work  would  be  done.  The  nation  would  be  that  much  richer,  its  blood 
would  flow  naturally  and  evenly,  unaffected  by  forced  respiration  and 
distortion,  every  bank  and  institution  of  trust  would  be  solvent  and  — 
the  people  would  be  free. 

There  seems  little  other  possibility  of  improvement  in  human  social 
and  political  conditions.  If  it  is  impossible  for  a  nation  to  take  down  its 
excise  and  tariff  walls  productively,  and  to  support  itself  from  social 
wealth,  it  seems  that  industrial  freedom  and  administrative  improve- 
ments are  but  dreams  and  must  always  remain  so. 


624  Political  Practice  Pt.  V 

The  operation,  strange  to  say,  could  be  performed  upon  two  or  more 
patients  at  the  same  time  with  slightly  less  certainty  of  failure  than 
upon  one.  Thus,  if  the  fiscal  schedules  of  France  and  Germany,  or  of 
England  and  the  United  States,  are  studied  in  relation  to  each  other, 
opportunites  will  be  presented  for  building  up  earning  powers,  opening 
new  markets,  and  inflating  securities  by  means  of  tax  reductions  which 
are  not  available  in  the  schedules  of  a  single  nation.  If  the  repeal  of  a 
tax  on  a  commodity  in  the  United  States  injured  certain  securities  in  that 
country,  the  tax  might  be  reduced  in  such  a  way,  with  reference  to 
other  markets,  that  it  would  cause  a  more  than  corresponding  rise  in 
securities  in  England.  These  two  influences  would,  of  course,  have  to 
be  examined  and  passed  upon  by  the  financial  houses  involved,  in  order 
to  become  available.  The  depression  occasioned  in  the  United  States 
could  be  met  in  different  ways.  It  could  be  met  by  a  prearranged  and 
compensating  transfer  of  values  from  England.  It  could  be  met  by  an 
exchange  of  the  American  tax  for  an  English  tax  designed  to  create  a 
compensating  rise  in  American  values;  or  it  could  be  met  by  the  reduc- 
tion of  yet  another  tax.  And  here  becomes  evident  how  great  would  be 
the  advantage  of  a  third  or  fourth  party  in  the  process.  Taxes  might 
be  removed  in  Germany  in  a  way  that  would  inflate  compensating 
values  in  the  United  States,  while  German  institutions  could  be 
protected  through  the  exchange  of  taxes  with  England,  France,  the 
United  States  or  Russia.  The  wider  the  process  the  greater  the  hope 
of  success. 

There  are  other  ways  in  which  a  fall  in  values  might  be  avoided.  The 
great  steel  and  iron  industries  of  Germany  and  the  United  States  may  be 
considered.  The  sudden  repeal  of  taxes  on  steel  and  iron  in  those  coun- 
tries would  affect  every  institution  holding  steel  and  iron  securities.  The 
institutions  might  possibly  be  protected  by  compensating  reductions 
of  taxes  upon  other  industries;  yet  a  collapse  in  steel  and  iron  securities 
would  be  disastrous  as  affecting  individuals.  This  danger  might  be 
nullified  by  means  of  carefully  studied  reductions  in  Austria,  England  or 
Russia  affecting  the  same  securities.  Thus,  the  artificially  controlled 
home  market  would  be  opened,  but  an  uncontrolled  world  market  would 
be  put  in  its  place  before  values  were  affected. 

Again  it  is  evident  that  material  shipped  abroad  from  a  highly  pro- 
tected country  must  pay  a  higher  transportation  rate  than  if  the  ships 
carrying  it  were  able  to  return  with  a  full  cargo.  Thus,  by  means  of 
the  repeal  of  taxes  on  goods,  freight  rates  might  be  lowered  and  so 


Bk.  II  The  Fiscal  Clearing  House  625 

compensate  for  tte  repeal  of  a  protective  tax  effecting  the  exporting 
industry. 

There  is  still  another  way  in  which  a  collapse  in  highly  protected 
securities  might  be  avoided.  This  is  by  means  of  an  international 
organization  of  the  industries  representing  such  securities.  If  the  pro- 
tected steel  and  iron  industries  of  Germany  and  the  United  States  were 
brought  under  one  control,  their  securities  could  be  more  effectively 
protected  in  any  system  of  tax  reduction  than  at  present.  If  the  more 
important  of  these  industries  throughout  the  world  were  amalgamated^ 
such  an  organization  would  be  in  control  of  the  world  market;  through 
it,  areas,  rates,  prices,  and  wages  could  be  arranged  in  the  most  advan- 
tageous manner  and  all  values  supported. 

With  some  such  systems  as  the  foregoing,  under  intelligent  centrol^ 
it  is  not  inconceivable  that  the  total  capital  in  any  coimtry  could  be 
increased  by  tax  reductions;  fiduciary  institutions  protected,  and  even 
existing  highly  protected  securities  in  some  cases  raised  in  value  at  the 
same  time. 

This  may  be  illustrated  as  follows:  It  may  be  supposed  that  an 
enormous  stone  wall,  with  but  one  opening,  were  built  around  every 
county  in  England;  that  trade  could  be  carried  on  through  this  opening 
alone,  and  that  the  passage  of  every  commodity  were  heavily  taxed.  It 
is  obvious  that,  under  such  conditions,  many  industries  in  the  different 
counties  would  be  highly  protected;  that  they  would  have  borrowed 
money  from  the  coimty  banks  on  their  collateral,  and  the  people  would 
doubtless  regard  any  form  of  county  existence,  not  shut  within  a  thick 
stone  wall,  as  visionary  and  impracticable.  If  the  walls  were  taken 
down,  their  industries  would  fail,  their  labour  be  thrown  out  of  employ- 
ment, and  their  banks  close  their  doors.  These  would  be  the  facts: 
they  would  thus  be  forced  to  continue  building  their  walls  and  dimin- 
ishing their  consuming  power  by  increased  cost  of  transportation  and 
taxes.  They  could  not  help  themselves.  Their  minds  would  be  in- 
capable of  conceiving  any  other  form  of  social  organization.  It  is, 
however,  evident  that  England  can  exist  without  stone  walls  around 
each  covmty,  with  only  one  opening  for  a  heavily  taxed  exchange  of  goods. 
It  is  also  evident  that  the  trade  between  the  coimties  in  England  to-day 
is  worth  more  to  the  English  people  than  it  would  be  if  they  were  fenced 
off  from  each  other  with  these  walls.  If  this  were  not  so,  walls  should  be 
built  around  every  coimty,  township,  and  village  in  the  coimtry,  for  the 
purpose  of  checking  trade,  and  the  people  could  increase  their  wealth 


626  Political  Practice  Pt.  V 

by  so  doing.  If  the  walls  exist,  however,  together  with  the  industries 
and  the  banks  with  the  protected  paper,  the  following  considerations 
are  suggested: 

The  paper  in  the  county  banks  of  England  to-day  is  worth  more,  and  is 
on  a  sounder  basis,  than  it  would  be  if  each  county  were  shut  off  from 
every  other,  and  all  the  trade  in  the  coimtry  dependent  upon  walls  and 
taxes.  The  problem  then  would  be,  how  could  the  people  get  free  from 
these  walls  and  taxes?  It  is  obvious  that  the  first  thing  should  be  the 
protection  of  the  banks  representing  their  credit  and  savings.  They 
should,  therefore,  form  these  county  banks  into  a  single  bank,  and  then 
throw  these  into  a  single  representative  institution  in  control  of  the 
finances  of  all  the  counties  combined;  when  this  is  done,  they  should 
turn  their  attention  to  the  industries  and  the  stone  walls.  As  supposed, 
there  is  but  one  opening  in  these  walls  through  which  goods  must  pass. 
If  the  tax  is  not  collected  at  this  opening,  the  industries  may  lose  their 
prices  or  market.  Their  paper  will  fall  and  the  banks  be  injured. 
It  is  obvious,  however,  that  these  industries  must  consume  certain  goods; 
if  not,  they  could  produce  nothing.  The  proper  thing  to  do,  then, 
would  be  to  find  out  what  these  goods  were;  next,  to  knock  a  hole  in  the 
wall  close  to  any  industry  considered,  so  that  transportation  expenses 
could  be  reduced.  This  reduction  could  then  be  calculated  and  a  pro- 
portionate amount  removed  from  taxation.  The  banks  would  not  be 
affected  and  no  harm  would  be  done  to  the  industry.  After  one  or  two 
such  attempts,  it  might  be  found  that  these  operations  were  beginning 
to  injure  paper  in  other  counties  and  to  destroy  valuable  markets  in 
other  directions.  This  is  what  the  central  organization  would  meet;  it 
should  see  that  these  walls  are  not  knocked  over  carelessly  and 
ignorantly,  but  that  every  stone  is  taken  down  systematically  and 
every  loss  met  with  compensating  gain.  The  central  organization  of 
the  banks  of  England  would  have  a  map  of  all  the  walls  and  all  the 
counties  before  it  and  be  able  to  see,  if  a  wall  were  pierced  in  such  a 
place,  that  running  expenses  could  be  lowered  and  earnings  increased. 
If  a  market  were  lost  or  paper  affected  in  the  process,  it  should  attempt  to 
make  another  opening  in  the  wall  near  the  industries  or  market  affected; 
so  that  wherever  a  market  were  lost  within  a  wall,  a  market  in  a  neigh- 
bouring country  could  be  supplied  to  take  its  place,  if  possible.  Thus 
the  industrial  and  financial  life  of  the  people  might  be  kept  sound  and 
strong.  If  this  process  were  continued,  it  seems  that  the  counties  might 
gradually  take  down  all  their  walls  sooner  or  later,  and  find  themselves 


Bk.  II  The  Fiscal  Clearing  House  627 

exactly  in  the  condition  in  which  they  are  to-day.  By  this  means  it  is 
not  only  probable,  but  practically  certain,  that  the  bulk  of  the  values 
represented  would  be  greater  with  the  walls  down  than  it  was  with  the 
walls  up.  These  considerations  with  reference  to  the  counties  of  England 
apply  to  the  nations  of  the  world. 

The  goal  toward  which  inquiry  seems  to  lead  is  here  reached.  That 
goal  is  the  suggestion  of  the  fiscal  union  of  the  great  industrial  nations 
of  the  world,  for  the  purpose  of  freeing  their  populations  from  the  dan- 
gerous indirect  burdens  upon  their  vital  needs  and  the  distribution  of 
their  wealth.  If  the  institutions  of  trust  of  different  nations  were  organ- 
ized with  such  an  object  in  \iew,  these  nations  could  form  a  single  cen- 
tral organization.  This  central  international  Clearing  House  would  be  in 
control  of  the  schedules  of  the  nations  forming  the  union.  By  means  of 
this  control,  it  could  develop  natural  markets  and  use  these  to  support 
values  adversely  affected. 


Book  III 
PRACTICAL    POLITICS 

CHAPTER  I 

THE   INDIRECT   TAX  IN   THE   UNITED   STATES 

Section  I  —  Indirect  Finance.     Section  II  —  Direct  Finance. 
Section  III  —  A  pplied  Direct  Finance. 


Section  I  —  Indirect  Finance 

N''  O  STUDY  of  indirect  fiscal  methods  is  complete  without  a 
brief  examination  of  the  indirect  financial  influences  which 
they  create.  The  United  States  presents  the  most  fertile 
field  for  the  growth  of  influences  of  this  kind.  A  large  land 
area  recently  absorbed  by  a  population  without  political  experience,  one 
of  the  most  costly  wars  in  history,  great  natural  resources,  and  a  democ- 
racy controlled  by  party  machinery,  acting  at  the  dictation  of  capital 
concentrated  by  the  fiscal  system  of  the  country ;  present  a  sofl  upon  which 
the  indirect  impost  on  consumption  will  flourish  as  nowhere  else.  The 
result  will  be  an  extraordinarily  rapid  congestion  of  the  national  wealth. 
This  process  of  wealth  congestion  has  been  summarized  as  follows:* 

"Fifty  years  ago,  there  were  not  to  exceed  fifty  millionaires  in  the  whole 
of  the  United  States,  and  their  combined  fortunes — including  the  half- 
millionaires  as  well  —  did  not  exceed  a  probable  $100,000,000,  or  i  per 
cent,  of  the  then  aggregate  wealth  of  the  nation.  Sixteen  years  ago  the 
combined  fortunes;  of  this  class  were  estimated  as  $36,500,000,000,  or 
56  per  cent  of  our  national  wealth.  To-day  a  bare  i  per  cent  of  our 
population  owns  practically  99  per  cent,  of  the  entire  wealth  of  the 
nation."  Thus,  if  these  figures  are  correct,  the  American  Democracy, 
having  $100  to  distribute  among  one  hundred  people,  hands  $99  to  one 
man  in  the  form  of  taxes  and  franchises  and  allows  ninety-nine  people 
to  underbid  each  other  for  the  remaining  dollar  in  the  form  of  wages. 

»  Henry  L.  Call.  Address  before  the  American  Associaliott  for  the  Advartcement  of  ScierKC,  December  27th, 
1906. 

628 


Bk.  Ill       The  Indirect  Tax  in  the  United  States  629 

Indirect  taxes  and  land  values  unassisted  would  not  congest  the  na- 
tional wealth  so  quickly;  the  process  of  accumulation  is  indefinitely  accel- 
erated through  the  control  of  the  taxing  power  and  the  influences  it 
creates.    This  is  the  way  it  is  done. 

The  chief  resource  of  the  classic  school  of  indirect,  or  "high,"  finance 
in  England  and  on  the  continent  was  for  many  years  debasing  the  coin 
of  the  population.  The  control  of  any  administration  made  this  an  easy 
and  profitable  process.  More  exact  systems  of  weights  and  tests  grad- 
ually discouraged  this  industry.  Paper  money,  however,  presented  a 
more  profitable  one;  for  the  value  of  the  paper  could  be  affected  indefi- 
nitely without  the  trouble  of  reissue.  The  higher  phases  of  finance 
thus  turned  toward  paper  money.  The  history  of  paper  issues,  as  time 
went  on,  began  to  make  some  impression  upon  the  popular  mind  with 
the  result  that  the  manipulation  of  these  fell  into  relative  disuse.  It  was 
found,  however,  that  paper  could  be  issued  and  influenced  in  forms  other 
than  money;  and  wider  and  higher  fields  were  opened.  Paper  may  be 
issued  against  the  decisions  of  a  legislative  body,  against  a  tax  on  an 
indirect  schedule  or  a  franchise;  it  may  be  controlled  through  a  trans- 
portation rate,  inflated  or  depressed  through  the  action  of  a  committee, 
affected  through  the  action  of  a  fiduciary  institution.  When  these 
principles  of  indirect,  or  high  finance,  are  understood,  they  present  pos- 
sibilities for  financial  wonder  working,  which  may  make  the  mere  debaser 
of  the  coin  or  paper  money  manipulator  hide  his  head.  They  may  be 
used  to  control  the  entire  process  of  the  wealth  distribution  of  a  nation. 
The  boasted  science  of  economics  has  nothing  to  do  with  it;  it  is  magic, 
pure  magic.    This  is  the  way  it  works: 

The  modern  industrial  society,  supported  by  indirect  methods,  places 
two  wands  in  the  hands  of  the  financiers,  gives  them  two  kinds  of  incense 
with  which  to  weave  their  spells  and  spread  their  charms  over  the  body 
politic.  These  wands  are  the  indirect  tax  and  the  transportation  rate; 
the  incense  consists  of  the  corporate  franchise  on  one  side  and  the  fidu- 
ciary institution  on  another.  As  long  as  we  control  these  four  elements 
of  fiscal  magic:  the  rate,  the  tax,  the  bank,  and  the  franchise,  the  wealth 
of  the  society  in  which  we  play  the  role  of  fiscal  magician  will  never 
flow  through  its  natural  channels;  we  can  always  spirit  it  away  or  turn 
it  in  any  direction  we  choose.  The  people  can  no  more  stop  us  than 
they  can  stop  the  winds  blowing.  Beaconsfield  used  to  say  that  nothing 
was  more  ridiculous  than  the  British  public  in  one  of  its  occasional 
spasms  of  morality:  he  never  saw  the  American  public  trjdng  to  "curb 


630  Practical  Politics  Pt.  V 

the  trusts"  or  catch  the  financiers.  It's  like  a  blind  man  trying  to  catch 
a  butterfly.  Give  us  control  of  those  wands  and  that  incense  and  the 
American  public  is  in  the  net;  not  the  butterfly. 

Whatever  the  American  people  do,  we  can  weave  a  spell  around  them. 
If  they  try  to  adopt  certain  legislation,  we  can  divert  it.  If  they  do 
adopt  certain  legislation,  we  can  interpret  it.  Whatever  decisions  they 
obtain,  we  can  construe  them;  whatever  men  they  elect  to  office,  we  can 
control  the  machine  that  controls  the  men.  No  matter  what  reform 
they  inaugurate,  we  can  control  the  ballot  boxes  or  count  the  vote  — 
nothing  can  stop  us:  we  control  the  control.^  Let  the  people  hurl  what 
spear  they  will  at  us,  and  we  can  stop  it  in  the  air  with  our  magic  or 
turn  it  against  themselves.  They  will  try  to  catch  us  in  one  place  but 
to  find  a  few  receivers  "receiving"  what  Httle  we  have  left.  They  will 
fly  off  in  another  direction  but  to  find  themselves  aboard  a  water-logged 
hulk  which  we  had  scuttled  long  ago.  They  wiU  try  to  "inquire"  into 
us  in  the  form  of  an  insurance  organization,  and  we  change  ourselves 
into  an  office  boy  or  a  gas  company.  They  will  start  for  the  office 
boy  or  the  gas  company  with  a  great  blowing  of  trumpets  —  and  we 
become  a  calm  and  peaceful  copper  mine,  a  thousand  miles  away.  They 
will  get  a  railway  president  to  "investigate"  us,  and  we  will  appear  to 
him  in  the  form  of  the  majority  of  the  stock,  or  the  board  of  directors, 
of  his  own  railway.  They  will  set  an  "honest"  politician  to  "reform  our 
methods"  and  we  flash  a  vision  before  his  eyes  of  the  machine  which 
keeps  the  honest  politician  in  office.  They  will  "crusade"  against 
us  in  the  form  of  a  railway  rebate,  and  we  appear  in  the  form  of  a  sol- 
vency of  a  great  fiduciary  institution.  They  mil  hear  about  some  inno- 
cent little  combination  or  holding  company  we  had  brought  together 
in  order  to  "protect  the  people,"  and  make  a  great  fuss  with  their  fines, 
their  statutes,  and  their  constitutions,  while  we  may  be  running  a  dozen 
such  organizations,  worth  fifty  times  as  much,  about  which  they  know 
nothing.  If  things  get  dull  or  the  people  require  a  little  more  protection, 
we  can  appear  in  the  form  of  a  civic  crusader  ourselves  and  go  crusading 
against  the  maladministration  of  our  own  organization  in  the  cities. 
These  "waves  of  reform"  are  excellent  things.  They  keep  the  local 
bosses  in  order.    They  help  us  "protect  the  people,"  and  put  up  the 

»  The  ease  with  which  this  is  done,  methods  adopted  and  specific  cases  will  be  found  described  in  the 
articles:  Al  the  Throat  0/  the  Republic,  by  Charles  Edward  Russell.  Cosmopolitan  Magazine,  December 
1907,  "One  can  order  any  reasonable  number  of  fraudulent  votes  with  as  much  certainty  as  one  would 
order  oysters,"  (p.  148).  "Nine  out  of  every  ten  elections  are  decided  solely  by  the  methods  of  the  vote- 
broker  and  the  ballot-box  stuffer,"  (p.  150). 


Bk.  Ill       The  Indirect  Tax  in  the  United  States  631 

market  rate  in  dollars  or  votes,  as  the  case  may  be,  of  the  *Sdce"  which 
we  dole  out  to  the  people  at  the  other  end  of  the  mystic  circle  in  the  form 
of  a  police  administration.  The  more  we  "reform  "  ourselves  in  this 
way,  the  easier  it  is  to  control  the  votes  and  monopolize  the  sale  of 
the  "vice." 

K  any  of  the  "honest"  politicians  grow  indignant  and  begin  to  inter- 
fere with  our  affairs,  the  chances  are  they  will  only  get  the  people  into 
trouble.  When  a  practical  politician  is  really  "honest,"  and  not  merely 
playing  politics,  it  usually  means  he  is  trying  to  blackmail  us.  How 
much?  If  the  good  old  plan  does  not  work,  all  we  have  to  do  is  to  let 
them  continue  their  righteous  vituperation  and  do  a  little  qmet  selling 
in  the  meantime.  They  are  certain  to  frighten  the  people  sooner  or 
later.  Sooner  or  later  a  bank  will  refuse  to  clear  for  this  or  that  institu- 
tion or  another  will  close  its  doors.  A  great  industry  will  default  on  its 
bonds,  or  receivers  will  be  appointed  somewhere  else.  We  can  then  call  a 
few  loans  in  one  place  and  turn  ourselves  into  a  run  on  a  bank  in  another, 
while  the  hghtning  of  a  financal  panic  flashes  over  the  country.  When 
this  has  gone  on  long  enough,  we  can  make  our  appearance  in  the  form  of 
a  few  million  dollars,  which  may  or  may  not  happen  to  belong  to  the 
people  themselves,  and  stop  the  runs  here  and  there  where  we  see  an 
opportunity  of  controlling  a  few  more  institutions,  or  rigging  up  a  new 
combination  of  organizations,  which  we  can  make  play  into  each  other's 
hands  and  into  our  own  pockets.  The  people  will  get  down  on  their 
knees  in  gratitude  to  us  and  we  then  appear  to  them  with  a  golden  halo 
on  our  brow  and  all  the  righteousness  on  our  side. 

The  plain  people  will  then  soon  begin  to  denounce  us  as  a  "govern- 
mental privilege,"  while  in  reality  we  are  nothing  but  an  innocent  untaxed 
ore  body,  oil  well,  franchise  or  a  few  million  acres  of  land  through  which  we 
are  thinking  of  running  an  extension  later  on.  The  plain  people  will  call 
us  "undesirable  citizens,"  "predatory  wealth,"  or  a  grinding  monopoly, 
while  we  will  be  nothing  but  a  steady  stream  of  the  plain  people's  own 
money  which  they  insist  upon  pouring  into  our  pockets  in  the  form  of 
indirect  tax  or  a  franchise;  nothing  can  stop  them  and  they  cannot  stop 
themselves.  The  plain  people  force  themselves  to  force  their  money  into 
our  pockets  and  then  they  criticize  us  for  taking  it.  The  plain  people 
will  think  that  we  are  a  great  statesman,  a  captain  of  industry,  a  meteoric 
Napoleon  of  finance  or  a  mighty  Empire  builder,  while  in  fact  we  are 
nothing  but  a  ring  of  plain  people  in  control  of  a  tax  or  a  rate. 

The  danger  of  the  existing  system  Ues  in  tolerating  the  control  of 


632  Practical  Politics  Pt.  V 

rates,  prices,  and  public  franchises  by  individuals.  Individuals  with 
such  control  may  with  ease  build  up  enormous  earning  powers,  simply 
by  diverting  the  circulation  of  a  people's  wealth  with  taxes  and  trans- 
portation agreements.  They  will  then  incorporate  and  capitalize  these 
earnings,  dispose  of  them  to  the  people  through  the  Exchanges  and  the 
institutions  of  trust,  and  the  people  will  thus  have  invested  their  savings 
in  capitalized  railway  rebates  and  taxes  on  their  own  needs.  The 
"widow  and  the  orphan"  will  own  the  paper;  the  great  statesmen  and 
the  financiers  will  own  the  money;  all  they  need  is  to  control  the  taxes 
and  rates;  they  can  then  inflate  the  paper  with  these  and  sell  it  to  the 
trust  and  insurance  companies.  To  affect  these  values,  no  matter  how 
created,  unintelligently  and  unproductively,  means  panic  and  disaster, 
and  can  mean  nothing  else.  This  may  be  illustrated  in  another  way! 
It  may  be  supposed  that  we  are  practical  poHticians  and  patriotic 
Empire  builders.  If  so,  we  desire  above  all  else  to  "protect  the  people." 
"encourage  industry,"  "raise  wages,"  "create  a  demand  for  labour," 
and  all  the  rest  of  it.  No  population  presents  a  more  advantageous 
field  for  such  operations  than  that  of  the  United  States.  The  attention, 
then,  may  be  turned  to  the  American  Republic  with  these  projects  in 
mind.  There  is,  of  course,  but  one  way  in  which  to  realize  our  hopes 
for  the  people  practically  —  taxes.  Everything  else  is  "visionary"  and 
"Utopian."  If,  however,  the  indirect  schedules  of  the  United  States 
are  examined,  the  outlook  is  not  encouraging  at  present;  little  is  left  to 
"protect."  The  fiscal  builders  have  been  at  work  and  scarcely  a  vital  or 
industrial  requirement  remains  to  form  the  basis  of  our  structures.  The 
foundations  are  preempted;  nearly  every  vital  need  of  the  people  is  taxed 
into  the  control  of  individuals.  Nevertheless,  no  really  "practical" 
Empire  builder  need  be  discouraged.  There  is  an  enormous  field  as  yet 
unexplored  by  the  builders  in  the  United  States.  If  the  people  of  the 
United  States  can  encourage  industry  and  create  a  demand  for  labour 
by  means  of  taxing  their  needs,  the  people  of  the  state  of  Maine  or 
California  can  do  the  same  thing  in  the  same  way.  If  the  population  of 
the  United  States  can  encourage  industry  and  protect  labour  with  a  ring 
of  indirect  taxes  "practically,"  the  population  of  every  state  in  the 
Union  can  do  so  as  well;  and  no  constitutional  theories  should  be  allowed 
to  interfere.  If  it  is  of  practical  advantage  to  tax  the  consumption  of  the 
American  people  as  a  whole,  it  must  be  "visionary"  for  the  populations 
of  the  different  states  to  lose  such  advantages.  If  the  populations  of  the 
United  States,  regarded  as  a  unit,  gains  anything  from  protective  taxes, 


Bk.  Ill       The  Indirect  Tax  in  the  United  States  633 

the  population  of  every  state  in  the  Union  must  lose  these  advantages, 
unless  they  form  a  row  of  indirect  taxes  around  their  borders.  What 
can  the  people  of  the  state  of  Illinois  gain  by  taxing  the  goods  of  Canada 
or  old  Mexico,  not  to  be  gained  by  taxing  the  goods  of  Maine  or  New 
Mexico?  Why  should  the  people  of  the  South  lose  all  the  advantages 
of  taxing  the  goods  of  the  North?  Why  should  the  people  of  the  West 
not  "encourage  their  industry,"  "create"  a  demand  for  their  labour,  and 
develop  their  "infant  industries"  by  taxing  the  produce  of  the  older 
industrial  centres  of  the  East?  Why  should  the  farmers  of  the  Eastern 
States  allow  the  grain  and  stock  of  the  West  to  be  "dumped"  into  East- 
ern markets,  their  labour  and  industries  to  be  undermined,  and  their 
capital  drained  away?  Why  should  the  people  of  the  state  of  New  York 
lose  all  the  capital  they  might  attract  through  the  balance  of  trade? 
Why  should  the  inhabitants  of  Pennsylvania  be  deprived  of  the  tariff- 
weapon?  The  conclusions  are  obvious.  If  any  of  these  measures  are 
practical  and  advantageous  for  the  states  combined,  they  must  be 
practical  and  advantageous  for  the  separate  states.  Either  the  people 
of  the  United  States  are  to-day  supporting  a  series  of  delusions  in  their 
fiscal  schedules,  or  they  are  losing  the  advantages  of  these  same  sched- 
ules formed  around  each  state. 

Let  it  be  supposed,  then,  that  after  one  of  the  usual  panics,  what  might 
be  called  an  Inter-State  Protective  party  is  organized.  The  people  are 
shown  how  "visionary"  it  is  to  lose  the  practical  benefits  of  Inter-State 
Protection,  how,  by  simply  estimating  the  difference  of  the  cost  of  pro- 
duction in  the  different  states,  their  labour  could  be  employed,  their 
wages  increased,  and  their  industry  developed.  It  is  obvious  that  it  is 
perfectly  possible  to  "encourage  industry"  and  "create  a  demand "  for 
labour  in  this  way  "practically."  If  we  took  each  state  as  a  unit  and  be- 
gan operations  with  indirect  schedules;  infant  industries  and  productive 
potentialities  could  soon  be  developed  which  to-day  are  non-existent. 
Every  practical  protectionist  argument  may  be  offered  in  support  of 
such  a  system.  If  values  can  be  built  up  in  the  United  States  by  shutting 
out  the  goods  of  Canada  or  Mexico,  values  can  be  built  up  in  Illinois 
or  Alabama  by  shutting  out  the  goods  of  Pennsylvania  or  New  York. 
One  is  no  more  "practical"  than  the  other.  It  is  evident,  however,  the 
day  after  the  adoption  of  this  policy,  that  no  enormous  amount  ot 
capital  would  suddenly  appear,  where  none  had  existed  the  day  before. 
The  result  is  that  in  building  up  our  industries  we  would  have  to  work 
with  the  capital  and  earnings  actually  existing  in  the  country. 


634  Practical  PoKtics  Pt.  V 

Thus,  it  is  decided  to  encourage  an  infant  iron  or  coke  industry  in  the 
state  of  New  York.  All  that  is  necessary  is  to  shut  the  iron  and  coke  of 
Pennsylvania  out  of  the  state  of  New  York  with  a  ring  to  taxes.  It 
seems  clear,  however,  that  the  day  after  these  taxes  are  imposed,  the 
people  of  New  York  need  not  necessarily  be  in  possession  of  greater 
capital  or  earnings  than  before,  yet,  none  the  less,  these  taxes  might 
develop  enormous  values  in  New  York.  By  means  of  taxing  the  con- 
sumption of  the  population  of  New  York,  we  could  accumulate  a  few 
"  tariff -weapon"  taxes  of  various  kinds,  which  would  be  reduced  where 
he  saw  an  opportunity  of  controlling  ore  bodies  or  coal  supplies  in  other 
states.  These  taxes  would,  of  course,  be  studied  in  relation  to  a  trans- 
portation system  or  a  freight  rate,  and  when  our  taxes  and  rates  were 
organized,  we  would  have  developed  the  possibility  of  producing  earnings 
in  the  state  of  New  York  which  do  not  exist  to-day  owing  to  the  theories 
of  the  visionary  inter-state  free  traders.  We  could  develop  these  earn- 
ing powers,  moreover,  without  the  expenditure  of  a  single  dollar  of 
capital  —  the  control  of  taxes  and  rates  is  all  that  is  necessary.  The 
next  thing  to  do  is  to  build  the  plants  and  "create"  a  demand  for  labour. 
Nothing  is  easier.  Of  course,  we  control  one  or  two  fiduciary  institutions, 
or  are  represented  in  them;  no  one  can  build  up  Empires  practically  or 
create  a  demand  for  labour  without  the  institutions.  There  will  be 
nothing  theoretical  about  the  earnings  developed  with  our  taxes;  these 
earnings  will  be  under  our  control  in  a  stream  of  real  dollars,  and  all  we 
have  to  do  is  to  lend  ourselves  the  money  which  the  people  have  entrusted 
to  us  against  the  taxes  which  we  impose  upon  the  people.  We  can  then 
build  the  plants,  control  the  earnings,  inflate  and  depress  the  securities 
as  we  please,  and  show  the  people  our  'payrolls  and  industries  in  order 
to  demonstrate  that  our  patriotic  protection  of  their  interests  can  create 
a  demand  for  labour  practically.  This  is  the  way  indirect  taxes  "create" 
a  demand  for  labour.  This  is  the  way  capital  seems  to  descend  from 
heaven  inside  of  a  ring  of  taxes  on  consumption.  This  is  the  way  capital 
seems  to  be  created  by  multiplying  taxes.  This  is  the  way  industry 
and  "empires"  are  built  out  of  the  life-blood  of  a  nation. 

To  any  one,  however,  who  understands  what  we  are  doing,  it  is 
evident  that  we  have  created  nothing  but  a  tax  on  a  necessary,  and  the 
opportunity  of  borrowing  the  savings  of  the  people  against  the  capitalized 
value  of  the  tax.  We  have  simply  diverted  a  stream  of  money  from  the 
earnings  of  the  population  with  a  tax,  incorporated  the  tax,  and  then 
sold  the  people  their  own  taxes,  or  rather  their  own  earnings,  fortheir 


Bk.  Ill       The  Indirect  Tax  in  the  United  States  6^$ 

own  savings.  The  people  would  be  taxed  in  order  to  allow  us  to  capi- 
talize their  taxes,  borrow  their  own  capital  from  their  own  institutions, 
and  then  they  would  be  forced  to  continue  to  tax  themselves  in  order  to 
pay  themselves  profits,  in  the  form  of  their  own  taxes,  and  protect  their 
own  savings  in  the  institutions  of  trust.  This  is  the  way  we  can  take 
away  from  those  who  have  not,  by  means  of  a  tax  on  a  vital  need 
not  only  the  little  they  possess,  but  that  which  they  think  they  have  in 
the  form  of  their  savings.  Yet  every  value  we  create  in  this  way  will 
be  "practical"  to  the  last  degree,  and  enter  vitally  into  the  whole  in- 
dustrial and  financial  life  of  the  country  through  the  solvency  of  its 
institutions. 

If  we  continued  to  "protect"  the  people  practically  in  this  way  for 
a  few  years  in  America,  we  could  force  enormous  values  into  the  banks 
and  insurance  companies  of  every  state  of  the  Union.     We  could  capi- 
talize taxes  imposed  upon  the  consumption  of  one  state,  and  "create" 
a  great  industry  where  none  existed  before;  but,  in  order  to  do  so,  we 
would  have  thrown  a  greater  amount  of  labour  out  of  employment  in 
another  state,  twisted  their  earnings  out  of  the  control  of  the  taxing 
populations,  checked  the  normal  accum.ulation  of  their  capital,  and  so 
have  thrown  another  mass  of  labour  out  of  its  natural  and  most  pro- 
ductive occupation.     "Theoretically"  the  people  will  have  lost  all  the 
advantages  they  might  have  gained  from  their  untaxed  and  unrestricted 
powers  of  production,   consumption,  distribution,  and  accumulation, 
but,  in  order  to  compensate  them  for  this  Utopian  dream,  we  have 
"practically"  sold  them  their  own  taxes  for  their  own  capital.     "Theo- 
retically," the  people  have  lost  every  gain  accruing  from  the  unrestricted 
accumulation  and  circulation  of  wealth;  but,  to  offset  such  academic 
delusions,  we  have  sold  them  their  own  earnings  for  their  own  savings. 
This  is  the  way  the  great  Empires  are  built.     All  that  is  necessary 
is  to  spread  a  ring  of  tax  gatherers  around  any  area  and  pile  up  patriotic 
fiscal  burdens  on  the  vital  functions  of  the  protected  population,  capi- 
talize the  taxes  and  sell  and  resell  them  through  the  Exchanges  and  the 
institutions.     Every  state  in  the  American  Union,  every  county  in 
England,  every  department  in'France,  can  be  built  up  into  a  protectionist 
Empire  by  taxing  its  consumption  and  capitalizing  the  earning  capacity 
of  the  taxes.     When  an  Empire  is  built  in  this  way,  however,  the  securi- 
ties issued  against  the  taxes  are  forced  into  the  heart  of  the  Empire 
through  the  institutions  of  trust,  and  the  taxes  can  then  never  be  touched 
without  danger.    When  we  begin  to  build  in  this  way,  there  is  only  one 


6^6  Practical  Politics  Pt.  V 

safe  thing  to  do  —  continue  building;  continue  to  force  the  taxes  and 
force  up  the  values.  Once  we  begin,  we  can  never  stop  building  until 
the  building  topples  over  of  its  own  weight;  and  the  higher  our  structure 
is  reared,  the  deeper  grows  the  pit  of  blood  and  misery  underneath* 
which  forms  the  foundation  of  our  edifice. 

Let  us  suppose,  then,  that  we  had  built  up  every  one  of  the  United 
States  into  a  protectionist  Empire,  such  as  France,  Germany,  or  any  of 
the  Administrations  of  what  Frederick  II  used  to  call  the  European 
*'cock-pit."  If  we  had  been  successful  in  our  efforts  to  protect  the  people, 
we  would  have  turned  each  state  into  a  progressive  Empire;  each  one 
piling  up  Imperial  taxes  on  its  vital  needs,  with  all  its  earnings,  savings, 
and  institutions  of  trust  dependent  upon  the  securities  and  industries 
we  had  organized  with  our  taxes.  Touch  these  taxes  unintelligently 
and  unproductively,  down  will  go  the  values,  the  institutions  will 
topple  over,  the  unemployed  will  flood  the  centres,  and  the  Empires 
will  either  go  into  active  revolution,  or  the  statesmen  and  empire  builders 
of  Kansas  and  Minnesota  will  begin  to  "receive"  the  money  of  investors 
and  despositors.  The  Imperial  populations  would  be  tied  up  in  a  knot 
with  their  own  taxes. 

Section  II  —  Direct  Finance 

If  the  total  earnings  in  the  United  States  to-day,  based  upon  freedom 
of  inter-state  trade,  are  greater  than  they  would  be  with  the  consuming 
powers  of  the  individual  states  strangled  in  a  network  of  taxes,  the 
possibility,  at  least,  would  exist  of  realizing  existing  values,  had  such  a 
fiscal  network  been  woven  about  the  industries  of  each  state.  If  every 
state  in  the  American  Union  had  been  built  up  into  a  protectionist 
Empire  with  indirect  taxes,  it  is  only  through  the  careful  and  productive 
realization  of  existing,  untaxed  industrial  values,  that  the  population 
could  build  up  the  greater  Empire  of  the  American  Union  as  it  exists 
to-day.  ^ 

It  must  be  admitted,  however,  that  this  building  would  be  difl&cult. 
If  all  the  states  of  the  American  Union  were  to-day  taxing  their  own 
consumption  in  order  to  encourage  industry  and  so  forth,  the  statesmen 
and  financiers  of  the  Empires  of  Missouri  or  Texas  would  have  loaded 
the  institutions  imder  their  control  with  securities  representing  the 
capitalized  value  of  these  taxes.  The  most  effective  way,  therefore, 
for  the  people  of  the  United  States,  regarded  as  a  whole,  to  free  them- 
selves from  these  tax-built  securities  and  Empires,  would  be  to  form 


Bk.  Ill       The  Indirect  Tax  in  the  United  States  637 

a  politically  effective  Union  of  the  Empires  involved.  This  Federal 
administration  could  form  every  institution  of  trust  of  the  local 
administrations  into  a  single  representative  institution;  these  could 
then  be  organized  into  a  central  institution  for  the  purpose  of  realizing 
the  imrestricted  earning  powers  at  present  in  existence.  If  the  repeal 
of  taxes  on  the  necessaries  of  life  of  the  patriotic  inhabitants  of  the 
Empire  of  Rhode  Island  or  Ohio,  endangered  the  institutions  of  trust 
of  the  Imperial  capitals  of  Providence  or  Columbus,  with  these  insti- 
tutions under  a  single  organization,  this  danger  might  be  avoided. 
Everything  should  be  done  to  support  and  increase  all  values  involved 
by  the  exchange  of  the  taxes,  and  the  liberation  of  the  markets  to  be 
found  in  the  other  great  Empires,  such  as  Minnesota  or  Iowa.  Every 
one  of  these  sources  of  value  should  be  studied  in  relation  to  existing 
values  before  any  were  touched,  and  still  greater  values  brought  into  ex- 
istence wherever  possible. 

If  by  means  of  a  ring  of  custom  houses,  every  state  of  the  American 
Republic  had  been  formed  into  an  Empire,  such  as  Germany  or  Austria, 
the  earnings  of  the  population  would  be  diverted  by  these  imperial 
taxes  and  turned  toward  the  banks  and  institutions  within  the  rings. 
These  rings  of  taxes  would  twist  existing  earnings  out  of  their  normal 
channels,  and  force  them  round  within  congested  tax-bound  areas.  If 
we  control  the  institutions  and  these  rings  of  taxes,  we  can  divert  the 
earnings  of  the  population  into  any  direction  we  choose.  This  is  indirect 
high  finance. 

If  the  institutions  holding  the  industrial  securities  of  a  nation  are 
draiATi  together,  every  tax  diverting  a  stream  of  money  into  an  industrial 
security  on  one  side,  may  be  used  to  turn  the  same  stream  of  money  into 
other  industrial  securities  on  another  side  by  the  repeal  of  the  tax. 
If  we  build  up  taxes  on  steel  and  iron,  we  pour  a  stream  of  the  people's 
money  into  steel  and  iron  securities.  If  we  take  the  taxes  off  steel  and 
iron,  we  can  pour  a  stream  of  money  into  railway  securities  and  the 
securities  of  every  steel  and  iron  consuming  industry  in  the  country. 
The  taxes  control  a  stream  of  money  as  they  go  up,  they  can  control  a 
stream  of  money  as  they  come  down.  It  is  simply  a  question  of  the 
control  and  the  direction  of  the  stream. 

A  nation  through  its  Administration  can  employ  the  same  wands  and 
the  same  incense  used  to-day  by  the  financiers;  and  if  ever  a  nation, 
under  proper  control,  begins  to  finance  in  this  way,  it  will  not  be  easy 
to  finance  much  higher  than  it;  for  the  reason  that  untaxed  consumption 


638  Practical  Politics  Pt.  V 

is  worth  more  in  annual  wealth-producing  power  than  taxed  and  strangled 
markets;  and  a  nation,  through  its  Administration,  can  control  all  the 
institutions,  all  the  franchises,  all  the  rates,  all  the  taxes,  and  —  all 
the  guns.    This  is  direct  high  finance. 

Section  III  —  Applied  Direct  Finance 
The  foregoing  flight  into  the  rarer  financial  ether  has  been  undertaken 
for  the  purpose  of  suggesting  another  source  of  value  which  might  be 
available  under  a  direct  fiscal  system  and  used  to  strengthen  institutions. 
This  value  is  represented  by  property  and  earnings  twisted  out  of  se- 
curities, not  by  taxes  alone,  but  by  indirect  or  "high  "  financial  influences. 
"By  a  fiction,  and  with  the  connivance  of  the  Federal  courts,"  says 
Mr.  Connolly,^  "these  men  in  control  of  the  Northern  Pacific  Company 
acquired  an  empire,  free  of  conditions,  estimated  by  competent  author- 
ities to  be  worth  one  thousand  million  dollars.^'  The  property  of  the 
great  bulk  of  a  population  supporting  such  a  system  will  be  largely 
at  the  mercy  of  the  men  who  control  it.  From  them  there  is  no 
appeal.  "The  more  one  looks  into  the  situation,"  says  Mr.  Con- 
nolly,2  the  more  one  will  be  convinced  that  the  courts  are  'packed'." 
Thus,  where  a  great  railway  is  wrecked  and  reorganized  for  the 
benefit  of  those  in  control  or  used  as  a  private  speculating  machine, 
the  earnings  of  the  road  are  diverted  from  the  real  owners  —  the 
stock  and  bond  holders  —  into  the  pockets  of  the  controlling  interests. 
Where  this  process  is  checked,  it  is  obvious  that  security  values  may 
be  proportionately  steadied. 

"In  December,  1893,  the  comptroller  of  the  currency  announced  the 
failure  during  the  year  of  158  national  banks,  172  State  banks,  177 
private  banks,  47  savings  banks,  13  loan  and  trust  companies,  and  6 
mortgage  companies.  ...  In  1894  there  were  156  railways,  opera- 
ting a  mileage  of  nearly  39,000  miles  in  the  hands  of  receivers.  .  .  . 
The  total  capitalization  in  the  hands  of  receivers  was  about  $2,500,000,- 
000  or  one  fourth  of  the  railway  capital  of  the  coimtry."^ 

In  1907  such  conditions  were  reproduced  with  great  loss  and  the 
shifting  and  congestion  of  enormous  values,  which  under  normal  con- 
ditions would  have  been  stable.  These  are  the  conditions  which 
must  reproduce  themselves  periodically  in  any  irresponsible  adminis- 
trative system  such  as  that  of  the  United  States. 

>  Big  Business  and  the  Bench.    Everybody's  Magazine,  June,  1912;  p.  837. 

*  Ibid.,  p.  841. 

•  Financial  History  of  the  United  Stales.     Dewey,  p.  446. 


Bk.  Ill       The  Indirect  Tax  in  the  United  States  639 

Such  a  system  will  create  a  situation  of  the  most  confused  and  com- 
plicated nature  with  an  uncontrolled  process  of  wealth  congestion  which 
it  may  seem  impossible  to  arrest,  yet  which,  if  not  checked,  can  but 
result  in  the  ine\'itable  dangerous  collapse  predicted  by  Macaulay.  It 
may  be  necessary  for  the  population  of  the  United  States  to  go  through 
two  or  three  more  civil  wars  before  it  begins  to  understand  even 
dimly  what  it  is  doing  with  its  tax-built  industry  and  its  paper-built 
financial  system,  A  collection  of  seventeenth  and  eighteenth  century 
political  curios  can  no  more  deal  with  such  a  situation  than  with  an 
earthquake.  As  Mr.  Bigelow^  used  to  say,  "flagrant  war"  can  be  the 
only  outcome. 

There  seems,  in  fact,  no  possibility  at  present  for  the  people  of  the 
United  States  to  free  themselves  from  existing  conditions.  The  taxes 
have  been  allowed  to  enter  too  deeply  into  their  industrial  life.  The 
honest  and  well-meaning  statesmen  will  be  powerless  to  touch  them  and 
the  ablest  financiers  incapable  of  remo\ing  them.  The  result  is  that 
the  politicians  will  continue  to  distract  the  popular  attention  with  their 
usual  wordy  wars,  and  the  financiers  to  pile  up  the  taxes  or  shift  them 
about  until  the  apparently  ine\itable  bloody  upheaval  occiu"s.  They 
cannot  help  themselves  and  the  process  cannot  be  stopped. 

The  population  has,  of  course,  not  the  slightest  comprehension  of  the 
subject.  The  follo-uing  is  a  citation  from  the  Republican  platform  of 
1908.  "In  all  tariff  legislation,  the  true  principle  of  protection  is  best 
maintained  by  the  imposition  of  such  duties  as  will  equal  the  difference 
between  the  cost  of  production  at  home  and  abroad,  together  with  a 
reasonable  profit  to  American  industries." 

If  some  American  industries  fail  and  some  succeed,  there  is  a  difference 
in  cost  of  production  among  American  industries;  that  is,  it  seems 
impossible  to  fix  any  single  duty  which  will  equal  the  difference  between 
the  cost  of  production  at  home  and  abroad.  If  some  foreign  industries 
fail  and  some  succeed,  and  the  most  effective  of  these  are  excluded  from 
American  markets,  America  will  lose  the  advantages  of  the  best  supply, 
and  of  the  most  productive  division  of  her  labor.  Again,  if  the  popu- 
lation of  America  is  taxed,  in  order  to  "assure  a  reasonable  profit  to 
American  industries,"  it  must  be  taxed  with  reference  to  the  worst 
managed  American  industries  in  relation  to  the  most  effective  foreign 
producer;  that  is,  the  taxes  must  guarantee  unreasonable  profits  to  the 
most  effective  American  industries  and  support  the  least  productive. 

«  Cf.  Letter  to  Civic  Forum,  December  17, 1909. 


640  Practical  Politics  Ft.  V 

In  other  words,  it  would  seem,  from  a  rational  point  of  view,  that 
this  "true  principle"  of  Protection  begins  with  a  practical  impos- 
sibility, continues  through  an  economic  absurdity,  and  ends  up  with 
a  flagrant  injustice.  This  is  the  theory  upon  which  the^  taxes  are 
built  up. 

Practically,  however,  the  application  of  this  "true  principle"  of  Pro- 
tection is  described  by  Senator  Bristow^  as  follows:  "They  had  no 
intention  of  considering  the  difference  in  the  cost  of  production,  they 
sneered  at  the  idea,  they  were  simply  intent  on  giving  their  political 
supporters  what  they  wanted."  This  is  the  way  the  theory  works 
"practically." 

Senator  Bristow  may  seem  too  severe  upon  his  colleagues  who  "sneered" 
at  the  true  principle  of  Protection.  It  is,  in  fact,  impossible  to  avoid 
sympathizing  with  these  statesmen,  for  when  the  "true  principle" 
is  understood,  it  seems  in  reality  little  worthy  any  treatment  other  than 
that  which  it  received.  Thus,  although  the  statesmen  "sneer"  at  it, 
the  population  swallows  the  "true  principle"  as  eagerly  as  the  "infant 
industry,"  the  "balance  of  trade,"  or  the  "pauper  labour";  more  taxes 
are  piled  up  on  the  vital  needs  of  the  people  and  the  cost  of  living 
soars  still  higher. 

This  increased  cost  of  living  begins  to  make  some  impression  on  the 
popular  mind,  with  the  result  that  the  "true  principle"  of  1908  is  aban- 
doned by  the  Republicans  in  191 2  for  the  "protection  of  labour,"  "diver- 
sification of  industry,"  and  "pauper  labour,"  which  the  people  so  well 
understand.  The  Progressives,  while  clinging  to  the  abandoned  "equal- 
izing of  conditions"  of  the  1908  platform,  make  a  new  discovery  in  that 
"primarily  the  benefit  of  any  tariff  should  be  disclosed  in  the  pay 
envelope  of  the  laborer."  This  is  an  interesting  development  in  pro- 
tectionist economics,  although  just  how  a  tax  collected  at  the  port  of 
New  York  is  to  find  its  way  primarily  into  the  pay  envelope  of  the 
labourer  in  central  Wisconsin  is  not  made  very  clear.  But  if  this  piece 
of  magic  could  be  performed,  in  what  would  it  result  but  taking  the 
money  out  of  the  pay  envelope  of  the  labourer  who  consumed  the 
taxed  goods,  to  put  it  into  the  pay  envelope  of  some  other  labourer? 

The  increased  cost  of  living  produced  by  this  kind  of  economics 
gives  the  Democrats  a  chance.  They  say  that  the  tariff  should  be 
"limited  to  the  necessities  of  the  Government."  They  add,  however, 
that  the  "system  of  tariff  taxation  is  intimately  connected  with  the 

»  a.,  p.  io6. 


Bk.  Ill       The  Indirect  Tax  in  the  United  States  641 

business  of  the  country,"  and  they  favour  "legislation  that  will  not 
injure  or  destroy  legitimate  industry." 

This  platform,  while  economically  a  great  improvement  over  the 
"true  principle"  and  the  "pay  envelope,"  will,  in  all  likelihood,  lead  to  no 
real  improvement  in  the  political  or  industrial  conditions  in  the  United 
States.  "The  Democrats  do  not  want  free  trade,"  says  Mr.  Wilson.^ 
This  means,  then,  that  a  gradual  general  lowering  of  exaggerated  duties 
is  all  that  is  to  be  attempted.  If  this  is  so,  and  if  the  attempt  is  suc- 
cessful, the  process  of  wealth  concentration  will  be  carried  on  under  the 
Democrats  v.'iih  but  slightly  lessened  speed  for  a  few  years,  when  a 
panic  or  bad  crops  will  give  a  "glorious  victory"  to  the  "true  principle" 
or  the  "pay  envelope"  and  the  process  will  be  accelerated. 

The  chances  are,  however,  that  the  situation  will  be  but  little  affected 
under  the  Democrats.  The  Underwood  Bill  is  but  a  protective  system 
of  taxes  somewhat  lower  than  the  Payne-Aldrich  Bill.  An  honest  and 
well  meaning  Executive  is  powerless  under  the  American  system. 
When  taxes  have  been  piled  up  to  a  certain  height,  it  is  often  to 
the  interest  of  politicians  to  lower  or  revise  them.  The  money  can  be 
made  either  way.  As  President  Cleveland  wrote  to  Representative 
Catchings  in  1894:^  "Senators  have  stolen  and  worn  the  livery  of 
Democratic  tariff  reform  in  the  service  of  Republican  protection." 
Cleveland  undoubtedly  had  at  heart  the  genuine  relief  of  the  popula- 
tion, but  could  do  nothing.  The  Wilson  bill  became  law  without  his 
signature.  The  present  Democratic  regime  will,  in  all  likelihood,  go 
through  very  much  the  same  phases  as  other  Democratic  regimes;  and 
then  the  Republicans  will  come  back  and  the  tariff  be  "revised"  again. 

But,  if  such  is  not  the  case,  what  can  the  population  hope  from  a 
Democratic  administration?  If  the  Democratic  party  is  able  to  put  all 
its  reforms  into  practice,  if  it  repeals  every  protectionist  measure,  and 
does  so  without  scandal  or  panic;  if  it  continues  in  power  for  fifty  years 
and  offers  the  people  a  fairly  honest  adminstration  during  that  time,  the 
people  of  the  United  States  will  be  living  under  a  system  analogous  to 
that  of  England  during  the  last  half  of  the  nineteenth  century.  The 
general  condition  of  the  population  of  England  is  probably  slightly 
worse  than  that  of  the  United  States  at  present.  This  is  apparently 
all  the  population  can  hope  from  the  Democrats.  The  indirect  taxes 
and  the  land  values  will  continue  to  congest  the  social  wealth  under 

*  Speech  at  Philadelphia,  Monday,  October  28,  1912. 
'  Cf.  Financial  History  of  the  United  States,  Dewey,  p.  436. 


642  Practical  Politics  Pt.  V 

whichever  party  is  in  power,  just  as  they  have  done  in  England  without 
any  protective  taxes.  The  population  will  continue  to  turn  itself 
into  paupers  and  plutocrats,  corrupt  police  and  "gunmen,"  under  which- 
ever machine  gets  control  of  the  votes,  and  the  population  cannot  stop 
itself.  As  Macaulay  said,  its  constitution  is  "all  sail  and  no  anchor. " 
It  lacks  the  means  of  arresting  the  process. 

The  American  Congress  to-day  no  more  represents  the  interests  of 
the  bulk  of  the  population  than  the  English  Parliament  under  George 
III  represented  the  interests  of  the  English  people  of  that  day. 

Not  imtil  the  Executive  of  the  United  States  is  able  to  act  indepen- 
dently of  a  machine  elected,  a  machine  controlled,  and  a  machine  or- 
ganized representation,  will  he  be  able  to  offer  the  people  any  adequate 
tariff  policy.  And  not  until  the  Executive  is  himself  in  personal  imme- 
diate touch  with  the  financial  life  of  the  nation,  through  a  great  central 
organization  of  its  institutions  of  trust,  will  he  be  able  to  formulate  or 
adopt  any  such  policy  with  intelligence. 

There  is  no  possibility  of  any  real  industrial  or  administrative  im- 
provement in  the  United  States  without  two  elements  which  the  popu- 
lation not  only  does  not  possess,  but  which  it  seems  to  lack  the  capacity 
to  develop.  England  is  the  only  country  possessing  them  in  any  degree 
of  eflficiency,  and  it  may  require  many  panics  and  another  civil  war  be- 
fore the  people  of  the  United  States  begin  to  understand  the  necessity 
of  such  elements  in  any  responsible  administration.  The  first  of  these  is  a 
great  Central  banking  institution  with  a  single  reserve  system;  the  sec- 
ond is  an  Administration  free  from  influences  dictated  by  franchises 
and  indirect  tax  schedules.  The  United  States  does  not  possess  the 
first,  and  if  it  were  formed  to-day  it  would  be  controlled  to-morrow 
by  the  dominant  financial  interests;  it  could  not  help  itself;  conditions 
would  force  it  into  their  hands.  The  taxes  and  the  franchises  would 
doit. 

The  situation  seems  hopeless  in  the  United  States,  and  it  may  be  as 
well  to  keep  the  politicians  explaining  how  the  increase  in  gold  and 
"prosperity"  account  for  the  high  cost  of  living,  wrangling  about  the 
"difference  between  the  cost  of  production,"  "representative  govern- 
ment," the  "separation  of  the  powers,"  "pure  democracy,"  "social  jus- 
tice," the  "rule  of  the  people,"  "maximum  prices,"  and  so  on.  The  empty 
rattle  of  the  brains  of  dead  Republics  can  be  heard  any  day  in  or  out  of 
Congress.  It  may  be  as  well  to  let  them  rattle  on,  anything  in  fact  to 
distract  the  popular  attention  from  the  one  vital  issue  —  the  real  stream 


Bk.  Ill       The  Indirect  Tax  in  the  United  States  643 

of  the  people's  real  money  controlled  by  the  taxes,  the  rates,  the  fran- 
chises, and  institutions. 

This  real  stream  of  real  money  is  that  with  which  any  responsible  and 
effective  Administration  would  have  to  deal,  and  no  Administration, 
not  independent  of  rings,  machine  support,  and  party  contributions 
can  touch  it;  this  is  the  stream  that  oils  the  machine  and  supplies  the 
contributions.  In  order  to  be  dealt  with  it  at  all,  it  should  be  thrown 
into  the  control  of  one  Central  institution.  This  institution  should  form  a 
single  reserve  system,  analogous  to  that  of  the  Bank  of  England,  and 
so  control  the  credit  system  of  the  country.  In  this  way  this  stream  of 
money  could  be  used  to  protect  values  of  all  kinds;  a  larger  amount  of 
capital  could  be  rendered  available  by  means  of  a  single  reserve;  and, 
through  the  control  and  extension  of  credit,  this  stream  of  money  could 
be  used  in  the  development  of  natural  untaxed  industry,  instead  of  in  the 
accumulation  of  tax-built  paper  as  at  present.  The  savings  of  the  people 
might  thus  gradually  be  released  from  investment  in  their  own  taxes, 
and  the  expenses  of  the  Administration  met  through  the  progressive 
absorption  of  unimproved  land  values. 

These  considerations  apply  with  certain  modifications  to  every  country 
in  which  industrial  values  are  affected  by  taxation. 


CHAPTER  II 

FRANCE 

FRANCE  presents  in  many  ways  the  most  interesting  body  of 
political  experience  in  modern  history.  She  blends  the  active, 
inquiring  citizenship  of  Greece  with  the  ruthless  application 
of  Rome;  she  reproduces  the  cruder  methods  of  antiquity 
under  the  influences  of  modern  thought.  Other  nations  hesitate,  tem- 
porize, compromise  and  their  revolutions  move  slowly.  France  formu- 
lates, defines,  and  cuts  with  a  knife.  She  drives  herself  through  three 
reproductions  of  constitutional  absolutism  while  other  nations  are  drifting 
through  various  combinations.  She  shows  the  furnace  in  which  nearly 
every  realizable  political  conception  has  been  put  to  the  test  of  fire. 

The  France  of  the  seventeenth  century  emerges  from  the  darkness  of 
the  Middle  Ages  at  the  head  of  the  wealth  and  culture  of  Western  civ- 
ilization; le  roi  soleil  as  her  guiding  light.  The  indirect  taxes  are  every- 
where at  work,  however;  the  great  King  wields  a  vanishing  sceptre 
and  rules  on  a  rotting  throne.  The  Administration  could  do  but  one 
thing:  force  its  existence  as  long  as  possible  and  then  fall  with  the  people 
into  the  inevitable  bloody  collapse.  The  people  scrambled  out  as  best 
they  could  and  made  the  most  violent  effort  in  history  to  cut  themselves 
off  from  the  past,  reorganized,  and  began  again.  They  began  again  at 
the  bottom  of  a  revolutionary  democractic  pit  and  forced  themselves 
round  in  it  with  "practical"  democratic  methods  imtil  they  found  them- 
selves under  the  sword  once  more.  But  the  Revolution  was  not  ended 
with  the  eighteenth  Brumaire;  another  world  of  practical  politics  re- 
mained to  be  explored;  the  world  of  progress  and  Imperialism.  Prog- 
ress for  any  given  population  means  but  one  thing  in  practical  politics:  it 
means  the  infliction  of  indirect  taxes  upon  other  populations.  France 
during  her  struggles  had  developed  one  of  the  most  perfect  of  military 
machines  and  her  tyrant  was  a  past  master  with  the  guns.  The  result 
was  that,  under  Napoleon,  France  made  phenomenal  progress  in  a  short 
time.  Progress  of  this  kind,  however,  demands  armies  in  the  field,  and 
armies  in  the  field  lick  up  money  in  proportion  to  the  progress.  In  or- 
der to  keep  the  armies  in  the  field  it  was  necessary  for  France  to  distort 

644 


Bk.  Ill  France  645 

the  circulation  of  her  own  wealth  with  indirect  taxes.  In  order  to  draw 
the  money  from  other  populations  it  was  necessary  to  suppress  and  distort 
the  circulation  of  wealth  throughout  the  whole  progressive  area;  that  is, 
the  home  population,  the  subject  populations,  and  those  against  which 
the  progress  was  aimed.  There  can  be  but  one  result,  a  slumbering 
volcano  of  hatred  and  patriotism  generated  or  the  other  side  of  the  taxes. 
The  progressive  bubble  will  burst  on  a  battlefield  and  the  other  popu- 
lations will  begin  to  make  progress  at  the  expense  of  the  home  popula- 
tion. 

These  seem  the  fundamental  ideas  about  which  the  practical  political 
intellect  has  revolved  since  the  beginning  of  the  poHtical  history  of  man. 
They  are  the  ideas  from  which  the  political  and  diplomatic  history  of 
Europe  takes  its  rise.  There  is  nothing  to  choose  between  the  methods  of 
Napoleon  at  Tilsitt,  Erfurt,  and  Presburg,  and  those  of  the  allies  at 
Vienna;  they  are,  in  fact,  identical.  As  the  wounded  lion  crouches  on 
the  bridge  at  Leipzig  or  utters  his  dying  groan  in  the  steely  squares  of 
Waterloo,  the  wolves  fling  themselves  on  his  carcass. 

After  the  hundred  days  France  was  "lost"  from  one  point  of  view; 
"saved  "  from  another.  With  all  her  experience  of  being  lost  and  saved 
in  this  way,  however,  France  has  never  lost  faith  in  the  ability  of  a 
practical  politician  with  an  indirect  tax  and  a  gun  to  accomplish  any- 
thing. Yet,  if  the  mental  processes  of  the  practical  politician  are  analyzed, 
reason  may  be  found  for  believing  that  he  will  do  nothing  with  his  gun 
and  his  tax  but  take  from  the  poor  to  give  to  the  rich.  Man  can  do 
nothing  in  any  practical  political  sense  but  move  matter.  He  may 
protectionize,  imperialize,  fiscalize,  patriotize,  or  do  anything  else  he 
pleases,  with  reference  to  indirect  taxes,  and  the  crude  fact  remains  that 
these  can  do  nothing  but  chip  a  piece  of  matter  from  another  piece  of 
matter  and  give  it  to  the  men  who  do  the  chipping. 

The  result  is  that  since  the  great  Revolution  France  has  but  drifted 
round  in  smaller  revolutions  with  the  inevitable  man  on  horseback  bring- 
ing up  the  rear;  in  other  words,  used  the  national  bayonets  to  chase 
the  national  coat-tails  through  the  gates  of  the  Palais  Bourbon. 

Any  one  v/ho  studies  the  mass  of  experience  presented  by  French 
politics  grows  skeptical  with  reference  to  the  practical  advantages  of  a 
tax  and  a  gun.  He  may  be  led  to  believe  that  the  only  use  of  an  indirect 
tax  is  to  be  exchanged  for  another  tax  in  order  to  protect  the  labour  and 
industry  of  the  people  and  give  them  access  of  the  necessaries  of 
life;  and  that  the  only  use  of  a  gun  is  to  see  that  that  is  done. 


646  Practical  Politics  Pt.  V 

If  indirect  taxes  are  removed,  every  bank  in  the  country  holding  certain 
paper  may  be  endangered.  Every  bank  holding  other  paper  may  be 
benefited.  This  shows  that  nothing  can  be  done  until  the  banks  are 
brought  together.  Every  bank  in  the  country  from  the  Pyrenees  to  the 
Belgian  frontier  should  be  put  under  the  control  of  the  Bank  of  France. 
Does  the  foreigner  injure  a  French  industry  by  excluding  it  from  his 
market  with  a  tax?  Does  France  injure  him  in  the  same  way?  Can 
the  taxes  be  exchanged?  If  so,  French  paper  will  go  up;  so  will  the 
foreigner's.  Some  one's  paper  may  get  hurt  and  loans  be  called.  The 
same  thing  applies  to  the  foreigner.  With  the  French  banks  properly 
organized,  the  Bank  of  France  will  see  that  no  French  institution  is 
injured.  The  foreigner  should  have  the  same  sort  of  an  organization 
to  do  the  same  work.  If  the  home  and  the  foreign  institutions  are 
brought  together  dangerous  complications  can  be  avoided,  and  an  old 
market  will  not  be  suddenly  withdrawn  as  a  new  one  was  expected. 

The  process  is  closely  allied  to  a  problem  in  hydraulic  engineering. 
A  single  organization  of  the  institutions  of  trust  of  the  coimtry  would  be 
able  to  control  the  level  of  the  total  values  represented.  This  level 
should  not  be  allowed  to  fall,  and  wherever  it  can  be  raised  by  pouring 
taxes  into  it,  this  should  be  done.  Where  this  level  is  steadied  or  raised, 
the  land  values  beneath  can  bear  the  expenses  of  raising  it.  The  reali- 
zation of  this  process  would  mean  real  freedom,  and  real  freedom,  based 
on  sound  finance,  is  the  only  thing  France  has  never  tried. 


CHAPTER  ni 

GERMANY 

GERMANY,  drawn  together  by  the  Napoleonic  wars  and  finally 
focussed  in  the  existing  Empire,  presented,  after  the  seventies, 
many  of  the  characteristics  of  a  youthful  nation:  union, 
patriotism,  progress,  and  military  enthusiasm.  These  develop 
through  the  usual  phases  into  the  usual  phases  of  Imperialism,  Protection- 
ism, enormous  accumulations  of  indirect  fiscal  burdens  and  extrava- 
gant miHtary  and  naval  expenditure.  Germany's  artificially  stimulated 
industrial  activity  combined  with  the  inevitably  attendant  extravagant 
taxation  have  produced  new  symptoms  in  the  body  politic.  The  ficti- 
tious industrial  pulsations  forced  by  indirect  taxes  are  much  more  power- 
ful and  rapid  in  modern  society  than  in  antiquity  or  even  before  the 
era  of  steam  and  electricity.  The  different  progressive  systems  of  Rome 
might  last  several  hundred  years  before  they  collapsed  one  after  the 
other.  There  seems  little  hope,  however,  for  any  such  relative  length 
of  life  in  the  modern  systems  with  their  tax-based  industrial  respira- 
tion. The  lungs  rise  and  fall  to-day  under  much  higher  and  more 
effective  pressure  than  that  of  even  a  half  century  ago.  The  taxes  and 
gunpowder  may  be  exploded  with  much  greater  rapidity  and  precision, 
and  the  inevitable  results  produced  in  a  much  shorter  time.  Thus 
conditions  may  be  seen  maturing  sooner  than  might  be  expected 
in  Germany. 

The  forced  and  distorted  circulation  induces  artificial  legislation  of 
great  complexity  in  order  to  counteract  its  effects.  Protection,  food 
taxes,  Kartels,  monopolies,  battleships,  Krupp  guns,  fiscal  and  financial 
difficulties  appear  on  one  side;  unemployment,  pauperism,  strikes,  dis- 
content, corruption  and  Socialism  appear  naturally  and  necessarily  on 
another.  The  Eagle  generates  the  battleships  and  the  Krupp  guns, 
these  generate  the  Kartels  and  the  food  taxes,  the  food  taxes  generate 
pauperism  and  unemployment,  these  generate  organized  Socialism  and 
the  Red  Flag.  It  seems  but  a  question  of  time  until  the  Eagle  and  the 
Red  Flag  meet  and  sooner  or  later  the  Red  Flag  will  fly  over  the  Eagle. 
In  welding  together  the  present  Empire,  Bismarck  was  keenly  alive 

647 


648  Practical  Politics  Pt.  V 

to  the  value  of  the  indirect  tax  as  a  cohesive  force.  The  indirect  tax, 
it  might  be  said,  is  the  germ  from  which  the  modem  progressive  in- 
dustrial society  takes  its  rise,  and  the  germ  which  generates  its  death. 
It  seems  but  a  question  of  time,  mechanics,  and  a  series  in  geometrical 
progression.  The  society  is  bom  with  the  indirect  tax,  nourishes  itself 
with  the  indirect  tax,  fills  its  lungs  with  the  indirect  tax,  stimulates  its 
heart  action  with  the  indirect  tax,  and  the  society  will  probably  cut  its 
own  throat  with  the  indirect  tax.  A  forced  price  on  a  vital  need 
with  a  self-perpetuating  series  of  progressive  accumulations  is  the  motive 
power. 

Where  a  progressive  population  increases  as  rapidly  as  the  taxes,  and 
there  is  no  undeveloped  land  area  at  its  disposition,  it  will  reach  a  point 
sooner  or  later  when  an  explosion  is  inevitable.  Where  two  populations, 
such  as  those  of  Germany  and  England  find  themselves  approaching 
such  conditions,  war  is  the  natural  result.  It  is  almost  the  duty  of  their 
Administrations  to  fling  them  at  each  other,  rather  than  let  them  tear 
themselves  to  pieces  with  internal  convulsions.  The  explosion  cannot 
be  avoided  under  such  conditions,  and  it  may  seem  wise  in  every  way, 
from  an  administrative  point  of  view,  to  direct  it  outside  the  society 
rather  than  allow  the  lava  to  overflow  the  domestic  hearth.  A  war 
splits  or  over-rides  opposition  to  the  Administration,  absorbs  the  unem- 
ployed, stills  the  agitators,  and  inflames  patriotism.  Thus  an  Anglo- 
German  war  seems  as  necessary  to-day  as  was  that  of  Athens  and  Sparta 
or  of  Rome  and  Carthage.  Under  analogous  conditions  there  seems 
nothing  else  to  do.  Yet  if  these  two  populations  allow  themselves  to  be 
exploded  into  each  other,  as  were  those  of  Germany  and  France  in  1870 
for  much  the  same  reasons,  the  chances  are  that  neither  one  nor  the 
other  will  reap  the  slightest  benefit  from  the  process,  while  a  few  in- 
dividuals in  control  will  accumulate  enormous  fortunes. 

If  Germany  gains  command  of  the  sea  she  may  enjoy  a  few  years  of 
expansion.  Imperialism,  and  progress  at  the  cost  of  enormous  fiscal 
burdens  upon  the  bulk  of  the  people.  The  progressive  population,  how- 
ever, will  multiply  like  weeds  in  an  uncultivated  field,  rapidly  fill  up 
every  outlet  opened,  and  begin  to  reproduce  existing  conditions.  England 
has  had  control  of  the  sea  for  generations,  yet  the  English  Empire  build- 
ers are  doing  all  they  can  to  show  that  the  average  English  worker 
is  worse  off  than  the  average  German  worker,  and  the  chances 
are  that  there  is  little  to  choose  between  them.  If  Germany  ex- 
pands until  she  bursts  into  a  war  with  England  and  gains  control  of 


Bk.  Ill  Germany  649 

the  sea,  she  can  read  her  own  future  in  the  industrial  conditions  of 
England  to-day. 

Is  there  any  alternative?  Why  not  put  the  banks  of  the  country  under 
the  control  of  the  Bank  of  Germany,  draw  up  the  Krupp  guns  behind 
the  banks,  instead  of  behind  the  food  taxes,  and  then  protect  and  develop 
the  industry  of  the  country  by  the  repeal  of  taxes  that  suppress  markets 
or  increase  fixed  charges.  The  control  of  the  rates  of  the  Government 
railways  can  help  in  the  process,  and  the  unimproved  land  values  may 
pay  the  bills. 


CHAPTER  IV 

RUSSIA 

RUSSIA  presents  an  enormous  population  in  the  grip  of  oflficiaL 
dom.  The  vast  areas  involved  and  the  lack  of  organization 
seem  to  render  futile  any  hope  of  social  or  administrative 
'"  betterment.  The  poor  and  ruthlessly  distorted  circulation 
is  of  long  standing,  the  congestion  of  the  most  exaggerated  nature, 
but  it  seems  that  they  may  force  their  existence  indefinitely.  The 
upheaval  in  China  shows,  however,  that  the  thing  cannot  go  on  for- 
ever. No  matter  how  effectively  the  ignorant  peasants  may  be  kept 
at  work  at  the  guns,  every  rouble  withdrawn  on  one  side  withdraws  a 
peasant  from  the  guns  on  another.  It  seems  to  be  but  a  mathematical 
calculation  in  roubles  and  muzhiks.  When  the  muzhiks  with  the  guns 
have  forced  the  roubles  away  from  the  muzhiks  with  the  hoes,  to  a 
compensating  extent,  the  latter  will  appear  in  the  field  with  the  scythes 
and  the  wood  axes.  One  side  will  kill  more  than  the  other,  and  then  the 
thing  will  begin  over  again.     Can  anj^hing  be  done? 

A  Republic,  a  real  constitution,  representative  government,  organize 
and  nationalize  the  wealth,  give  the  land  to  the  peasants,  tax  its  unim- 
proved value  are  some  of  the  suggestions  offered.  None  of  these  really 
goes  to  the  heart  of  the  matter.  The  Republics  and  constitutional 
governments  reproduce  more  or  less  analogous  conditions  wherever  in 
operation,  and  the  radical  suggestions  will  find  the  whole  force  of  the 
Government  against  them.    The  practical  reason  is  not  far  to  seek. 

In  1909  the  average  Russian  seems  to  have  imported  to  the  value  of 
about  10  shillings;  the  average  Englishman,^  to  the  value  of  £13, 17s.  yd., 
well  over  twenty-five  times  as  much.  The  conditions  are  of  course  not 
analogous,  but  it  seems  none  the  less,  if  Russian  trade  were  allowed  to 
flow  naturally,  that  her  imports  might  be  vastly  increased  without  reach- 
ing even  the  relative  average  importation  of  England. 

The  bulk  of  Russian  trade  is  carried  on  through  the  European  frontier, 
the  Black  Sea  and  Finland.     "The  custom  duties  levied  at  these  three 


1  Statesman's  Year  Book,  igii,  p.  73.    Russian  population  160,095,200.   Imports,  788,448,000  roubles. 
Ibid.,  pp.  1150,  1178. 

650  .. 


Bk.  Ill  Russia  651 

frontiers  form  90  per  cent  of  all  custom  duties  (1907)."!  These  taxes, 
combined  with  the  excise  and  land  values,  represent  the  industrial 
pulsations  of  the  heart  of  the  Russian  people.  The  existing  Government 
will  force  them  as  long  as  a  bayonet  is  at  its  command.  It  looks  very 
much  as  though  taxes  and  force  and  want  would  be  the  lot  of  the  bulk 
of  Russian  muzhiks  as  long  as  they  continue  to  reproduce.  If  they  can 
ever  get  free  they  can  do  so,  but  along  some  such  lines  as  the  following : 

The  natural  conditions  of  the  country  and  her  vast  area  render  the 
population  of  Russia  largely  dependent  upon  agriculture.  Russia's 
policy  of  stifling  the  trade  of  her  people  works  two  evils  at  once.  It 
deprives  her  agrarian  population  of  the  best  machinery,  and,  by  forcing 
ships  to  enter  Russian  ports  almost  in  ballast,  it  saddles  her  own  pro- 
duce with  a  double  transportation  rate  in  foreign  markets;  that  is,  there 
and  back.  Russia  entangles  her  helpless  millions  in  a  net  with  one 
hand,  strangles  them  with  another,  and  is  forced  to  keep  the  Cossacks 
at  work  with  the  guns  pumping  taxes  into  their  lungs  in  order  to  keep 
them  alive  during  the  process.  If  Russia  stops  working  the  guns  the 
people^will  collapse  inside  the  net;  if  she  takes  her  hand  from  their  throats 
they  will  probably  have  a  fit  of  violent  insanity.  If  she  continues  with 
the  grip  and  the  guns,  the  people  wall  be  at  each  other's  throats  sooner 
or  later.  It  is  but  a  question  of  roubles  and  muzhiks  in  geometrical 
progression. 

If  there  is  any  solution  it  lies  in  loosening  the  net  with'care.  The  in- 
telligent unlocking  of  the  consuming  powers  of  a  great  population  such 
as  that  of  Russia  can  create  enormous  values  in  Germany,  England,  and 
the  United  States.  The  inflation  of  these  values  will  increase  the  demand 
for  Russian  produce  in  every  market  of  the  world  and  put  every  Russian 
value  affected  upon  that  much  sounder  basis.  If  these  opportimities 
are  presented  to  Russian  statesmen  and  financiers  in  proper  form,  they 
may  be  able  to  reduce  taxation  productively,  put  new  values  and  new 
pulsations  in  the  banks  of  Moscow  and  St.  Petersburg,  and  give  the  land 
to  the  men  willing  to  pay  the  most  for  it. 

>  Ibid  p.  1174. 


CHAPTER  V 

ENGLAND 

ENGLAND,    alone  among  the  nations,    is  unburdened  with 
protective  taxation  and  stands,  therefore,  a  step  nearer  in- 
dustrial freedom  than  any  other.    To  suppose  that  she  will 
ever  actually  free  herself  may,  however,  seem  impossible  to 
any  one  familiar  with  English  conditions.     If  a  fiscal  astrologer  were  to 
attempt  to  cast  the  political  horoscope  of  England,  his  mind  might 
drift  along  some  such  thought  as  the  following: 

War  with  Germany  will  make  relatively  little  difference  one  way  or  the 
other  to  the  bulk  of  the  population;  the  only  practical  result  will  be  a 
great  accumulation  of  taxes  whoever  wins.  The  real  issue  is  the  distrib- 
ution of  the  social  wealth  in  the  form  of  taxes  and  land  values.  These 
will  continue  to  congest  the  national  wealth  in  certain  channels,  pauperism 
will  continue  to  spread  over  the  country,  labour  organizations  will 
grow  in  power.  In  spite  of  suggestions  of  referendums,  Colonial  and 
Imperial  Conferences,  and  Home  Rule,  the  chances  are  that  the  fear 
of  food  taxation  will  keep  the  Liberals  in  power  longer  than  the  by- 
elections  seem  to  indicate.  Home  Rule,  however,  will  weaken  them, 
radical  votes  will  accumulate,  and  the  unemployed  merciuy  will  con- 
tinue to  crawl  up  in  the  populous  thermometers.  The  head  and  the  tail 
of  the  people  have  already  met  in  Parliament.  Home  Rule  and  taxes 
will  increase  the  opposition  votes.  The  votes  will  swell  up  the  tail. 
It  will  begin  to  wag.  It  will  split  the  Liberals  and  the  Conservatives 
will  come  back.  When  the  Conservatives  are  in  power  they  will  have 
to  do  something.  Without  the  repetition  of  Liberal  policies  there  is 
only  one  thing  they  can  do  —  Tariff  Reform.  Protection,  preference, 
retaliation,  tariff-weapons,  food  taxes,  "easily  handled"  schedules  and 
so  on  will  be  scattered  over  the  people  with  a  generous  hand.  The 
Radicals  and  the  Socialists  may  be  kept  quiet  for  a  time  with  a  few 
taxes  hung  on  in  some  mysterious  way  or  with  different  forms  of 
pensions  and  insurance.  Capital  held  in  reserve  in  order  to  see  what 
would  happen  will  begin  to  seek  investment  under  this  or  that 
tax.    The  practical  Empire  builders  will  add  up  a  row  of  millions  and 

652 


Bk.  Ill  England  653 

talk  about  "the  facts"  and  a  "created"  demand  for  labour.  Enormous 
artificial  activity  may  be  caused  by  shifting  about  the  wealth  of  a  people 
through  the  taxing  power.  The  landed  and  manufacturing  interests 
will  be  united  to  a  man.  It  will  seem  Hke  the  good  old  days  before  the 
Reform  and  the  Corn  Law  agitation.  Something  like  the  rotten  boroughs 
and  the  piping  times  of  the  "hungry  forties"  will  reappear.  The 
Parliament  Act  of  191 1  will  be  amended  or  repealed.  Parliament  will 
complete  another  series  of  rings,  and  produce  new  sequences  of  Acts, 
amendments,  and  repeals  with  great  rapidity.  If  Mr.  Spencer  were 
alive  he  would  begin  to  count  up  the  repeals.  Every  one  who  is  any  one 
will  be  delighted.  Practically  Mr.  Chamberlain  is  perfectly  right;  the 
surest  way  to  go  fast  is  to  sit  on  the  safety  valve  —  until  the  boiler 
bursts  and  even  then  we  go  still  faster. 

No  one  who  understands  the  action  of  indirect  schedules,  however,  will 
hope  for  lasting  benefit  from  these  measures.  He  will  know  that  they 
can  produce  nothing  but  so  many  more  millionaires  in  Mayfair,  so  many 
more  paupers  on  the  poor  rates,  and  raise  the  imemployed  mercury  that 
much  higher.  It  is  nothing  but  the  long  familiar  "practical"  process 
of  trying  to  keep  a  dog  alive  by  forcing  it  to  eat  its  owm  tail. 

Napoleon^  showed  it  in  all  its  purity  when  he  used  the  public  fimds  in 
the  public  market  to  force  up  the  rate  of  the  public  debt.  It  is  nothing 
but  taking  property  from  one  part  of  the  people  to  give  it  to  another 
part  of  the  people.  Tariff  Reform  will  but  shift  the  weight  on  the  lever 
of  the  safety  valve  and  force  the  whole  nation  that  much  nearer  the  pit. 
The  pit  is  always  there,  the  nation  digs  it  under  itself  with  its  own  taxes, 
and  the  taxes  will  force  it  into  it  whether  it  wants  to  go  or  not.  More 
taxes  can  stop  the  Socialists'  votes  from  falling  over  the  coimtry,  labour 
unions  from  growing  in  power,  and  the  unemployed  from  flooding  the 
centres  as  easily  as  more  taxes  can  stop  a  channel  fog  from  crawling 
over  London  when  the  wind  is  in  the  right  direction.  Strikes  will 
grow  in  effect  and  extent,  the  unemployed  will  increase  in  numbers, 
and  sooner  or  later  the  labyrinths  of  the  great  centres  of  population  will 
vomit  their  hordes  over  the  face  of  England  and  there  will  be  no 
power  to  check  them. 

Can  anything  be  done?  The  following  is  a  citation  from  Thorold 
Rogers  :2 

"A  cause  of  dissatisfaction  is  the  practice  of  putting  all  local  taxation 

r  '  Cf.  Thiers  Histoire  de  V Empire,  Tome  II.    XVI..  p.  iig. 
»  Work  and  Wages,  pp.  532.  S33- 


654  Practical  Politics  Pt.  V 

on  the  occupier.  This  is  especially  felt  in  towns,  where  local  taxation 
is  increasingly  severe.  The  industries  which  aggregate  in  towns  have 
by  their  natural  competition  for  building  sites,  aggravated  by  artificial 
scarcity  induced  on  a  limited  area,  continually  enhanced  the  ground- 
value  of  house  property  in  densely  peopled  localities.  .  .  .  It  is 
commonly  and  confidently  said  that  these  taxes  are  only  paid  through 
the  occupier,  and  not  by  him;  that  is,  if  they  were  shifted  to  the  landlord 
or  the  owner  of  the  ground-rent,  the  price  would  be  enhanced  by  all  the 
tax.  To  this  it  is  a  sufficiently  practical  answer  to  say,  that  in  such  a 
case  no  wrong  can  possibly  be  done  by  transferring  local  taxation  to 
the  ground  owner  and  building  owner  in  towns." 

The  ground  owner  will  at  once  perceive  the  injustice  of  Professor 
Rogers'  suggestion;  to  the  occupier  this  injustice  will  not  be  so  clear. 
The  economist  may  believe  that  such  a  suggestion  should  be  adopted. 
The  man  who  deals  with  conditions,  however,  knows  that  it  does  not 
meet  the  situation. 

Any  such  suggestion,  in  order  to  be  effective,  should  apply  to  ground 
values  all  over  the  country:  Railways,  mines  and  land  privileges  of  all 
kinds.  To  lay  the  leaden  hand  of  an  Administration  upon  values  which 
may  or  may  not  affect  institutions  of  trust  is  a  dangerous  thing  to  do 
in  practical  politics,  and  no  intelligent  Chancellor  of  the  Exchequer  would 
do  it.  No  Chancellor  of  the  English  Exchequer  can  offer  the  people  of 
England  any  intelligent  system  of  fiscal  reform  until  the  English  people 
themselves  begin  to  understand  what  they  are  doing  with  their  indirect 
taxes,  and  the  danger  reflected  on  the  horizon  by  existing  labour  condi- 
tions. Under  existing  conditions  no  Chancellor  of  the  Exchequer  will 
do  anything  but  continue  the  aimless  juggling  of  tax  schedules  in  some 
form  or  other  until  the  people  of  England  begin  to  get  to  work  on  these 
schedules  themselves;  until  they  organize  their  institutions  of  trust  in 
such  a  way  that  none  of  these  can  be  injured,  and  then  try  to  put  the 
unimproved  land  values  in  the  National  Treasury  and  the  indirect  sched- 
ules in  the  vaults  of  the  banks  of  England  in  the  form  of  industrial 
securities.    How  can  such  a  visionary  thing  be  done? 

In  a  protectionist  country  the  repeal  of  a  tax  on  an  industrial  raw 
material  may  inflate  the  securities  of  certain  industries.  In  England, 
where  no  protective  taxes  exist,  the  problem  is  a  different  one.  Every 
tax  on  an  indirect  schedule,  however,  blocks  a  market  in  some  form  or 
other:  if  it  did  not,  it  would  produce  no  revenue. 

This  market  will,  moreover,  possess  an  annual  money  value  to  the 


Bk.  Ill  England  655 

industries  adversely  affected.  These  industries  will  be  foreign  or 
domestic.  If  foreign,  English  statesmen  can  oflfer  the  tax  to  foreign 
Administrations  in  exchange  for  a  foreign  tax  carefully  studied  in  re- 
lation to  English  values.  If  the  reduction  of  a  tax  hurt  English  paper 
on  one  side,  it  could  be  repealed  in  such  a  way,  with  reference  to  foreign 
schedules,  that  it  might  inflate  English  paper  on  another.  If  the  indus- 
tries are  domestic,  it  lies  with  them  to  estimate  how  much  they  would  be 
benefited  by  the  repeal  of  taxes  on  their  markets.  A  letter  has  been 
cited ^  to  show  how  a  tax  imposed  by  the  Administration  of  England, 
even  upon  a  subject  population,  can  injure  English  industry,  depress 
English  securities,  and  throw  English  labour  out  of  employment. 

What  about  the  revenue  and  the  condition  of  the  country  during  any 
such  period  of  tax  reduction?  The  Bank  of  England  understands  the 
financial  conditions  of  the  country.  The  Bank  should  be  put  in  control 
of  every  financial  institution  of  importance.  It  should  study  the  total 
values  represented  by  these  in  relation  to  total  land  values.  If  the  Bank 
said  that  a  tax  could  be  repealed,  it  could  be  done.  If  the  Bank  said 
that  a  certain  percentage  of  certain  unimproved  land  values  could  take 
the  place  of  the  tax,  the  change  could  be  made. 

England,  for  several  reasons,  is  the  nation  best  suited  to  take  a  decisive 
step  toward  real  freedom,  and  the  natural  leader  and  centre  of  such  a 
movement,  should  it  occur.  England  possesses  in  her  great  national 
Bank,  an  institution  not  only  already  in  immediate  contact  with  the 
financial  and  administrative  life  of  the  country,  but  an  institution  com- 
manding the  respect  of  the  world.  England  is  entangled  in  no  pro- 
tective system  of  taxation  polluting  her  Administration,  and  possesses 
a  monetary  system  nearer  pure  gold  than  any  other.  The  Bank  of 
England,  therefore,  contains  the  most  effective  key  to  the  entire  situa- 
tion, national  and  international.  If  the  people  of  England,  and  of  any 
other  nation  or  nations,  ever  decide  to  increase  their  wealth  and  pro- 
ductive power  through  the  liberation  of  their  industries  and  markets, 
England's  is  the  natural  Administration,  and  the  Bank  of  England  the 
existing  institution  around  which  other  institutions  could  be  grouped. 

>Cfp.  147. 


CHAPTER  VI 

THE    EAST 

A  VOLUME  might  be  written  in  study  of  the  relation  of  East- 
ern and  Western  fiscal  systems  in  connexion  with  direct 
taxation.  Such  study  would  revolve  about  a  few  consider- 
ations which  might  be  stated  as  follows:  A  population 
in  the  East  will  be  either  independent  or  under  Western  influence. 
If  the  first,  it  needs  money  to  build  battleships,  make  progress,  and  so 
forth:  If  the  second,  it  must  be  protected.  The  only  way  to  do  either 
is  to  tax  the  vitals  of  the  population  and  sell  the  taxes  in  the  money 
centres  of  the  West.  Take  off  the  taxes,  institutions  will  begin  to  shake 
in  London  and  Paris,  taxes  will  shoot  up  in  the  West  and  men-o'-war 
will  crawl  through  the  Suez  Canal. 

The  chief  fruits  of  taxes  with  which  Eastern  populations  are  inflicted 
in  this  way  are  famines  and  security  values;  the  East  gets  the  famine, 
the  West  gets  the  security.  It  may  be  said,  however,  that  the  untaxed 
consuming  powers  of  the  vast  populations  of  the  Orient  are  of  great 
industrial  value  in  the  West;  and  this  value  can  be  brought  into  existence 
but  by  the  elimination  of  burdens  upon  Eastern  consumption.  If  the 
West  ever  begins  to  realize  the  value  of  its  own  untaxed  consuming 
power,  the  taxes  restricting  this  at  present  can  be  exchanged  for  Eastern 
taxes.  The  values  these  represent  in  industry  will  inflate  Western 
paper  and  strengthen  institutions  during  the  process.  The  East  might 
meet  its  obligations  with  unimproved  land  privileges,  and  increase  the 
value  of  its  own  paper  through  the  exchange  of  other  taxes  for  Western 
concessions. 

There  are  three  dangers  threatening  every  society  under  existing 
conditions;  in  the  East  as  well  as  in  the  West  —  (i)  Foreign  aggres- 
sion or  control.  (2)  Ignorance  and  disorder  below.  (3)  Ignorance 
and  corruption  in  its  own  administration.  If  the  society  ceases  to 
exclude  or  tax  the  goods  of  foreign  socieries,  it  may  free  itself  from  im- 
necessary  biu-dens,  gain  the  advantages  of  unrestricted  commerce,  in- 
crease its  wealth  and  the  chief  cause  of  foreign  aggression,  and  control 
will  cease  to  be  effective.  This  cause  is  the  manipulation  of  values  through 

656 


Bk.  Ill  The  East  657 

the  control  of  indirect  schedules.  No  foreign  influence  possesses  the 
power  to  enforce  and  collect  direct  taxes  throughout  a  great  and 
hostile  population.  If  the  society  checks  the  process  of  taxing  its  own 
goods,  the  exploitation  of  the  poor,  through  the  control  of  such  tax- 
ation, will  cease  at  the  same  time,  and  the  danger  from  below  grow 
less.  If  the  society  withdraws  from  its  Administration  the  power  to 
absorb  wealth,  not  directly  created  by  the  society  itself,  the  Administra- 
tion will  be  largely  freed  from  corrupting  influences,  and  lose,  at  the 
same  time,  its  power  to  exploit  the  resources  of  the  society  in  its  control. 
There  will  be  an  added  danger,  however,  affecting  society  under  any 
fiscal  system,  and  which  a  direct  system  would  not  alter.  This  danger 
is  multiplication  in  numbers  beyond  a  normal  relation  to  land  area* 
Matter  in  the  form  of  humanity  seems  to  reproduce  itself  unconsciously 
much  as  it  does  in  the  form  of  weeds  or  locusts.  Where  land  will  sup- 
port it,  it  overflows  and  "increases  and  multiplies."  This  results  in  the 
members  of  a  population  bidding  against  each  other  for  the  right  to  use 
bits  of  the  surface  of  the  earth.  This  process  creates  ground-rents  which, 
under  the  existing  system,  are  paid  to  the  ground-rent  owner.  Under  a 
direct  system  they  would  be  paid  to  the  State.  Where  a  population 
increases  beyond  a  certain  relation  to  its  land  area,  these  values  will  rise 
rapidly  and  the  food  supply  diminish  relatively,  at  the  same  time.  If 
the  population  continues  to  increase,  it  will  find  itself  upon  a  treadmill 
under  a  direct  system,  analogous  to  that  upon  which  society  finds  itself 
to-day  with  its  indirect  taxes.  In  other  words,  if  a  society  does  not 
develop  sufficient  intelligence  to  limit  its  numbers  to  land  area  and 
food  supply  it  will  produce  little  but  famine,  ground-rents,  and  revolu- 
tions under  whatever  system  of  production  and  distribution  it  adopts. 


CHAPTER  VII 

CONCLUSION 

O  ERASMUS  is  due  the  observation,  worthy  the  Stagirite 
himself,  to  the  effect  that  the  human  understanding  is  like 
a  drunken  clown  on  horseback  —  support  him  on  one  side, 
he  collapses  on  another,  and  the  process,  it  seems,  may  be 
continued  indefinitely.  The  farther  inquiry  is  pushed,  the  farther 
realization  recedes.  "Of  making  many  books  there  is  no  end,  and  much 
study  is  a  weariness  to  the  flesh."  Weariness  and  skepticism  may  well 
seem  the  only  goals  at  the  end  of  every  path  really  followed,  but  skep- 
ticism leads  nowhere.  If  the  drunken  clown  starts  to  ride  his  horse,  he 
falls  off  altogether. 

The  greater  the  intensification  of  skepticism,  however,  the  less  grows 
faith  in  the  political  manifestation  of  the  human  intelligence,  and  the 
greater  the  faith  in  Nature,  or  in  human  freedom.  Freedom,  however, 
presents  difiiculties  in  application  which  may  well  seem  greater  than 
those  existing.  The  chief  difiiculty  lies  in  capitalized  industrial  values 
forced  by  taxation.  These  values  are  forced  into  the  industrial  heart 
and  lungs  of  the  people  through  their  institutions  of  trust.  These 
values  must  continue  to  be  forced,  or  the  people  will  die  industrially  and 
financially.  The  nation  will  force  itself  to  death  in  any  event,  for  these 
taxes  but  congest  the  blood  and  air  into  an  ever-contracting  space, 
until  there  is  a  greater  expanding  force  generated  than  the  contracting 
force  of  the  taxes.  When  this  point  is  reached  the  nation  explodes  and 
begins  again. 

Human  "practical  politics"  are  as  near  perpetual  motion  as  anything 
man  is  likely  to  discover.  Practical  politics  lives  upon  indirect  taxes, 
and  indirect  taxes  produce  nothing  but  revolutionary  rings.  The  great- 
est revolutionary  forces  are  the  Prime  Ministers,  the  Parliaments,  and  the 
Legislative  Assemblies  at  present  in  power.  They  work  with  indirect 
taxes  and  forced  paper,  and  their  taxes  and  paper  are  constantly  shift- 
ing the  ground  from  under  them;  constantly  turning  the  treadmill 
beneath  their  feet.  When  a  nation  reaches  a  point  where  the  taxes 
have  forced  the  national  wealth  to  a  certain  level  in  certain  channels, 

6s8. 


Bk.  Ill  Conclusion  659 

the  laws  of  political  gravitation  will  shift  the  force  from  one  direction 
to  another;  the  wheels  will  begin  to  revolve,  the  revolution  will  occur 
and  the  great  statesmen  and  the  financiers  can  stop  it  as  easily  as  they 
can  stop  the  revolutions  of  the  spheres. 

The  practical  political  wisdom  of  man  is  much  like  that  of  a  squirrel 
on  a  wheel  in  a  cage.  The  squirrel  cannot  explain  rationally  what  he 
is  doing  or  why  he  is  doing  it;  he  is  a  "practical"  squirrel  and  simply 
continues  to  turn  the  wheel. 

When  a  revolutionary  period  is  reached,  the  pikes  and  the  scythes 
chase  the  lions  and  the  eagles  round  in  a  ring  amidst  the  wildest 
"patriotism"  on  both  sides.  The  pikes  and  the  scythes  then  turn  them- 
selves into  lions  and  eagles;  breed  another  generation  of  pikes  and 
scythes,  and  the  thing  begins  again.  The  indirect  taxes  -v^dll  do  it,  the 
squirrel  has  but  made  another  revolution  on  the  wheel  inside  the  cage. 

The  question  is  whether  a  nation,  on  reaching  a  point  at  which  the 
wheel  begins  to  turn,  can  obey  the  laws  of  political  gra\itation,  without 
wallowing  through  the  usual  pit  of  pikes  and  blood.  It  seems  not. 
The  vital  importance  of  the  existing  system  to  the  industrial  life  of  a 
nation  will  force  existing  Administrations  to  force  its  existence  as  long 
as  possible  —  that  is,  force  the  nation  into  the  pit.  If  the  pit  can  be 
avoided,  however,  it  can  never  be  done  by  turning  the  usual  treadmill. 
The  squirrel  should  try  to  think  of  the  possibility  of  getting  out  of  the 
cage  altogether,  and  then  he  will  not  be  in  the  wheel  any  longer.  It  must 
be  admitted,  however,  that  this  is  a  most  "academic"  possibility  for  any 
practical  squirrel  to  contemplate.  No  squirrel  in  the  history  of  the  world 
has  ever  been  able  to  get  out  of  the  cage.  The  bars  are  built  of  steel 
and  gold,  and  cannot  be  broken.  The  only  way  for  the  squirrel  to  get 
out  of  the  cage  is  to  begin  to  study  the  subject  of  cage  making  —  Empire- 
building,  in  other  words  —  on  his  own  account. 

The  best  way  to  study  this  subject  practically,  is  with  a  list  of  indus- 
trial security  values  and  a  tax  schedule  in  one  hand;  a  list  of  foreign 
prices  of  raw  materials  and  finished  products  in  another.  With  these 
in  view,  it  may  seem  that  a  home  tax  taken  off  a  raw  material  may  put  up 
a  security  value,  and  that  a  foreign  tax  taken  off  a  finished  product  may 
do  the  same  thing.  The  next  thing  is  to  realize  that  a  home  tax  is  a 
foreign  tax  to  a  foreigner,  and  vice  versa.  The  next  thing  seems  to  be 
to  exchange  the  home  tax  for  the  foreign  tax,  and  increase  the  industrial 
values  affected.     This  is  the  way  to  take  the  cage  apart. 

The  attempt,  however,  would  not  be  easy.  It  would  involve  problems 


66o  Practical  Politics  Pt.  V 

of  the  greatest  complexity  and  importance  at  every  step.  To  try  to 
inflate  a  security  value  in  one  place,  might  depress  values  in  another 
to  a  dangerous  extent,  and  nothing  but  disaster  result.  There  would 
probably  be  a  flare  of  fire  and  Hghtning  here  and  there,  and  now  and  then. 
The  real  problem  is,  in  fact,  so  difficult  that  any  solution  may  be  scarcely 
worth  contemplating.  All  indications  seem  to  show  that  the  future  of 
humanity  will  be  but  the  repetition  of  the  dreary  rings  of  blood  and 
wretchedness  which  form  the  history  of  its  past.  The  attempt  to  check 
the  process  would  result  in  something  very  like  a  major  operation  in 
fiscal  surgery. 

The  anatomical  features  of  the  operation  might  be  suggested  as  fol- 
lows: The  heart  of  the  patient  is  divided  into  three  ventricles:  (i) 
The  socially  created  wealth.  (2)  The  national  treasury,  (3)  the 
fiduciary  institutions.  The  blood  of  the  first  flows  to-day  largely  into 
the  hands  of  indi\iduals.  The  blood  of  the  second  is  forced  up  out  of 
the  vitals  of  the  people.  The  natural  action  of  the  first  of  these,  together 
with  the  forced  action  of  the  second,  as  they  expand  and  contract,  pump 
the  blood  into  the  third  ventricle,  and  so  keep  up  a  forced  and  dan- 
gerously distorted  circulation. 

An  effective  operation  would  require  the  running  of  a  knife  into  the 
patient's  heart,  in  such  a  way  that  the  blood  represented  by  the  national 
wealth  would  be  turned  into  the  national  treasury.  At  the  first  touch 
of  the  knife,  however,  if  not  adjusted  with  perfect  accuracy,  the  third 
ventricle  will  begin  to  lose  blood  with  great  rapidity.  Here  is  where  the 
danger  Hes.  There  is  but  one  hope  of  avoiding  a  fatal  hemorrhage  in 
the  third  ventricle.  If  the  national  wealth  is  turned  into  the  national 
treasury,  it  is  obvious  that  the  blood  filling  that  ventricle  to-day  can  be 
proportionately  released  and  allowed  to  flow  naturally  through  the  whole 
body  politic.  If  this  is  done  in  exactly  calculated  relation  to  every  drop 
withdrawn  on  one  side,  it  may  generate  sufficient  power  to  force  a 
compensating  amount  of  blood  into  the  third  ventricle  from  another,  and 
so  sustain  the  circulation  necessary  to  keep  the  patient  alive.  If  this 
can  be  done,  the  operation  would  be  a  success;  the  patient's  heart  would 
beat  normally  and  the  blood  flow  through  all  his  veins  and  arteries. 
If  not,  the  knife  would  cut  into  such  an  explosion  of  blood  and  dynamite 
as  the  world  has  seldom  seen. 

The  operation  might  be  described  in  fiscal  terms  as  follows: 

I.  A  great  Central  banking  organization,  or  Clearing  House,  in 
control  of  a  single  reserve  system  would  be  necessary.    By  means  of  this 


Bk.  Ill  Conclusion  66 1 

organization  the  solvency  of  all  fiduciary  institutions  could  be  protected 
at  every  step.  This  would  be  the  first  condition  «f  success;  ^^'ithout  it, 
nothing  could  be  done. 

II.  Existing  Administrations,  constitutions,  institutions,  and  judi-^ 
ciaries  should  be  used  at  all  times,  wherever  possible.  Friction  and 
confusion  would  thus  be  greatly  lessened. 

III.  The  value  of  the  land  privileges  of  the  country  should  be  sus- 
tained and  developed  through  security  of  tenure  and  productive  use. 
Every  encouragement  and  protection  should  be  given  to  capital  in 
every  form.  Capital  invested  in  highly  taxed  and  artificial  industries 
should  be  given  every  opportunity  of  readjustment,  directly  assisted 
where  necessary,  and  never  suddenly  affected.  Inducements  should  be 
offered  to  capital,  and  credit  extended  wherever  the  natural  industries  of 
the  country  could  be  developed.  This  would  apply  especially  to 
railways,  mines,  and  large  land-using  corporations.  No  readjustment 
in  rates  and  prices  necessary  to  sustain  these  values  should  be  opposed. 
The  Administration  should  depend  ultimately  upon  them  for  support. 

IV.  The  earning  powers  suppressed  by  indirect  taxation  should  be 
carefully  developed  by  means  of  the  gradual  repeal  of  taxes  on  industry. 
The  annual  value  of  every  tax  on  vital  necessaries  should  be  realized, 
as  far  as  possible,  through  its  exchange  for  other  taxes,  by  means  of  which 
new  markets  could  be  opened  and  the  investment  of  capital  and  untaxed 
industry  encouraged. 

V.  As  indirect  systems  were  abandoned,  socially  created  wealth  in  the 
form  of  land  values  could  be  allowed  to  flow  into  the  national  treasury, 
through  a  gradual  and  progressively  applied  process  of  absorption. 

VI.  If  the  socially  created  wealth  is  greater  than  administrative 
expenses,  the  surplus  could  be  allowed  to  flow  back  to  the  people  through 
a  system  of  old-age  pensions. 

With  some  such  policy  more  or  less  understood  by  a  population,  in- 
dustrial emancipation  might  at  least  be  attempted  without  a  hopeless 
fiasco  at  the  start.  Under  the  most  favourable  conditions,  however, 
it  would  be  a  difiicult  process;  doubtless  full  of  unexpected  compli- 
cations, for  it  is  impossible  to  foresee  all  conditions  which  might  be 
developed.  Only  the  frank  acceptance  of  these  conditions,  the  recog- 
nition and  conservative  treatment  of  every  difiiculty  as  it  arose,  could 
hope  to  make  such  an  attempt  with  even  the  semblance  of  success. 
It  is  useless  to  urge  the  patient  to  submit  to  the  operation.    If  it  has 


662  Practical  Politics  Pt.  V 

advantages,  he  must  understand  them  himself.  If  he  cannot  see  them, 
there  are  none.  They  are  like  the  great  subjective  principle  of  the 
criterion  of  truth;  they  are  like  the  kingdom  of  God  —  they  exist  within 
or  they  exist  not  at  all. 

The  three  chief  factors  in  the  intellectual  history  of  man:  political 
administration,  the  science  of  nature,  and  his  sense  of  the  eternal, 
present  three  currents  of  thought  almost  constantly  in  conflict  with 
each  other.  The  harmonizing  of  these  would  represent  the  rational 
self-realization  of  man  as  a  member  of  society.  Whether  such  realiza- 
tion is  ever  to  occur  or  not,  time  alone  can  decide.  It  seems  safe  to 
assume,  however,  that  no  such  hope  can  be  entertained  under  existing 
industrial  and  political  conditions.  The  rational  man  can  find  no  place 
in  them,  but  at  the  same  time  he  may  find  no  opportunity  of  escape; 
no  gateway  leading  to  intellectual  freedom.  Reason  and  his  hope  of  a 
better  world  point  in  certain  directions,  but  the  actual  needs  of  the  hour 
force  him  in  a  third,  with  the  existing  discordant  results;  and  the  process 
perpetuates  itself  indefinitely. 

These  three  fields  have  been  reviewed  with  the  purpose  of  discover- 
ing their  relation  to  each  other.  The  conclusion  suggests  that  ethical 
and  rational  considerations  support  commercial  and  industrial  freedom 
as  the  most  advantageous  system  of  human  relations,  national  and 
international.  Practical  considerations  show  'the  difficulty,  if  not  the 
impossibility,  of  the  realization  of  any  such  relations  and  the  import- 
ance of  these  existent  conditions  cannot  be  ignored.  They  represent 
the  crux  of  the  situation:  the  Gordian  knot  which  must  be  cut  if  ever 
man  is  to  live  in  harmony  with  the  best  he  has  in  him  and  the  best  the 
■^orld  has  to  give. 

The  words  of  but  one  man  in  the  history  of  thought  show  a  rational 
and  scientific  comprehension  of  the  disease  from  which  society  is  at 
present  suffering.  The  words  of  that  man  have  suggested  themselves 
at  times  throughout  the  present  inquiry.  The  words  of  that  man  con- 
tained the  essence  of  the  only  unanswerable  positions  developed  by 
speculative  thought.  They  rang  true  when  brought  in  contact  with 
the  progressive  process  of  accumulation  and  deprivation  resulting  from 
indirect  fiscal  system;  true  with  reference  to  the  economic  application 
of  social  wealth  — of  that  which  is  Caesar's;  true  in  the  light  thrown 
by  Science  over  the  future  of  mankind.  The  words  of  that  man  contained 
the  pure  metal  resulting  from  an  analytical  comparison  of  the  religions  of 
the  world. 


Bk.  Ill  Conclusion  663 

There  is  an  old  East  African  adage  which  says:  "The  monkey's 
grandmother  was  a  fool."  If  ever  the  nations  of  the  world  realize  the 
fact  that  their  existing  progressive  political  and  fiscal  systems  are  all 
inherited  directly  from  that  apparently  not  very  highly  gifted  lady, 
they  may  possibly  begin  to  question  them  as  the  final  embodiment  of 
administrative  wisdom.  If  they  begin  dimly  to  understand  their 
poHtical  and  fiscal  methods,  and  to  study  these  in  relation  to  the  admin- 
istrative methods  represented  by  the  Nazarene,  they  may  begin  to  free 
themselves  from  the  fiscal  and  political  conceptions  of  the  monkey's 
grandmother,  which  they  are  supporting  to-day. 

If  ever  such  an  attempt  is  made,  the  men  of  those  nations  should 
support  their  existing  governments,  whatever  they  are,  but  while  sup- 
porting existing  systems  they  should  run  up  the  Imperial  Insignia  of  the 
Federation  of  the  World  beside  the  union  jack  and  the  stars  and 
stripes;  beside  the  tricolour  of  France;  the  united  standards  of  Ger- 
many and  Russia,  and  the  yellow  and  the  red  of  China  and  Japan  — 
the  one  real  World  Empire  can  be  built  with  the  indirect  schedules  of 
those  Administrations.  A  single,  united  system  of  tax  reductions  is 
greater,  in  wealth-producing  power,  than  any  number  of  systems  of  tax 
constructions. 

If  ever  men  begin  to  build  in  this  way,  they  will  construct  a  new  king- 
dom in  the  demolition  of  the  old,  and  a  new  design  will  appear.  A 
design  purer,  stronger,  and  more  enduring  than  anything  they  have  yet 
conceived.  At  the  head  of  the  corner  of  that  new  design  will  be  laid 
the  stone  the  other  builders  had  rejected.  On  that  stone,  cut  clear  and 
deep,  will  be  the  words:  One  Tax,  One  Freedom,  One  Kingdom,  and 
One  God. 


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E 

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Empedocles.     Cf.  Diels. 

Epictetus,  Dissertationes,  ed.  minor,  Schenkl,  Teubner,  Leipzig.  1858. 

Epicurus.     Cf.  Diogenes  Laertius. 

Erdmann,  Professor  J.  E.,  A  History  of  Philosophy,  Translation  edited  by  W.  S. 

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F 

Farr,  W.,  Cf.  Hunter. 

Farrar,  Lord,  Memoranda  presented  to  the  Royal  Commission  on  Local  Taxation, 

Cf.  Smart. 
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Fox,  A.  W.,  Rating  of  Land  Values.     King,  London,  1906. 
Fox,  J.  W.,  The  Imperial  &  Asiatic  Quarterly  Review,  Oct.,  1904. 
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G 

Gallatin,  A.,  Free  Trade  Memorial.     Cf.  Taussig. 
George,  Henry,  Protection  and  Free  Trade.     George,  N.  Y.,  1891. 
GiFFiN,  Sir  Robert,  Memoranda  Presented  to  the  Royal  Commission  on  Local  Taxa- 
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GoDKiN,  E.  L.,  Problems  of  Modem  Democracy.     Scribner,  N.  Y.,  1896. 
GoRGiAS,  Cf.  Sextus  Empiricus. 

Grayson,  Victor,  Election  Address.     Review  of  Reviews,  London,  Aug.,  1907. 
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H 
Hadley,  a.  T.,  Railroad  Transportation.    Putnam,  N.  Y.,  1899. 
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HtiME,  David,  Essays  Moral,  Political,  and  Literary.     Longmans,  London,  1875. 
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J 

Jevons,   Professor  W.   S.,  Investigations  in   Currency  and  Finance.     Macmillan, 
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K 

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L 

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668    AUTHORS,  EDITIONS,  AND  SOURCES  QUOTED 

Lewes,  George  Henry,  Biographical  History  of  Philosophy.     Appleton,  N.  Y.,  1857. 
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M 

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Maine,  Sir  Henry,  Ancient  Law.     Murry,  London,  1887. 

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Mallock,  W.  H.,  Aristocracy  and  Evolution.     Macmillan,  N.  Y.,  1901. 

Mathews,  Mr.  Cf.  Royal  Commission  on  Local  Taxation. 

Martial,  Ed.  Gilbert.     Teubner,  Leipzig,  1901. 

Maudsley,  Dr.  Henry,  Body  and  Will.     Kegan  Paul,  Trench,  &  Co.,  London,  1883. 

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M'Laren,  D.,  Indirect  Taxation.     Colston,  Edinburg,  i860. 

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Miles,  H.  E.,  American  Industries,  N.  Y.,  Nov.  15,  1907. 

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Mohammed,  Cf.  Koran,  Lane-Poole. 

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Mullach,  F.  G.  a.,  Fragmenta  Philosophorum  Graecorum.     Didot,  Paris,  1875. 
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N 
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O 

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AUTHORS,  EDITIONS,  AND  SOURCES  QUOTED    669 

Pliny,  C.  Plinii  Secuncli.  Weidmann,  Berlin,  1866. 
Plotintjs,  Ed.  Volkmann.     Teubner,  Leipzig,  1883. 

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Plutarch,  Scripta  Moralia,  Didot,  Paris,  1S41. 

PoLYBius,  Translation  by  Evelyn  S.  Shuckburgh,  Macmillan,  London,  1889. 

Proctor,  R.  A.,  Our  Place  Among  Infinities.     Chatto  &  Windus,  London. 

Protagoras,  Cf.     Sextus  Empiricus. 

Pythagoras,  Cf.  Aristotle,  Diogenes  Laertius. 

Q 

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R 

Rawlinson,  George,  History  of  Ancient  Egypt.     Longmans,  London,  1881. 

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Renan,  Ernest,  De  I'Origine  du  Langage.     Michel  Levy  Freres,  Paris,  1859. 

• ,  Vie  de  Jesus,  Calmann-Levy.     Quarante-sixieme  edition,  Paris. 

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Ricardo,  D.,  Principles  of  Political  Economy.    MacmiUan,  N.  Y.,  1895. 

RiCKM.^N,  Mr.     Cf.  Royal  Commission  on  Local  Taxation. 

Rogers,  Professor  J.  E.  Thorold.     Six  Centuries  of  Work  and  Wages,  Putnam,  N.  Y. 

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Sabin,  Mr.     Cf.  Royal  Commission  on  Local  Taxation. 

Sale,  George,  The  Koran.     Burt,  N.  Y. 

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Shearman,  Thomas  G.     Natural  Taxation.     Doubleday  &  McCIure  Co.,  N.  Y., 

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Smart,  Professor  WiUiam,  The  Return  to  Protection.     Macmillan,  London,  1904. 
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670    AUTHORS,  EDITIONS,  AND  SOURCES  QUOTED 

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Taylor,  Thomas.     Cf.  Plotinus. 

Thales.     Cf.  Aristotle, 

Theophrastus.    Cf.  Diels. 

Thompson,  Mr.    Cf.  Lillie. 

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W 

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Wells,  D.  A.,  The  Theory  and  Practice  of  Taxation.     D.  Appleton,  N.  Y.,  1900. 

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London,  1881. 
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INDEX 


A  BELARD,  sio. 

^^  Acworth,  W.  M.,  271,  273. 

Acton,  Lord,  559. 

Adams,  Samuel  Hopkins,  51. 

Aeschylus,  342,  397. 

Agricultural  Land,  247,  et  seq. 

Alexandrians,  502. 

Anaxagoras,  402,  460,  468. 

Anaximander,  401,  431. 

Anaximenes,  427,  441. 

Andrews,  George  H.,  161. 

Antigone,  398. 

Antoninus,  419. 

Architecture,  334. 

Arch,  Joseph,  288. 

Argyll,  Duke  of,  234. 

Aristippus,  482. 

Aristocles,  481. 

Aristocracy,  556,    Cf.  Political  Theory. 

Aristotle,  425.  Anaxagoras,  402,  465, 
466,  467,  468.  Anaximander,  432. 
Aristippus,  483.  Cynics,  483.  Democ- 
ritus,  458.  Empedocles,  450,  456, 
457.  Ethics,  414.  God  of,  402.  Gorgias, 
470.  HeracUtus,  449.  Immortahty, 
413.  Knowledge,  Theory  of,  488. 
Method,  359,  539.  Parmenides,  437, 
439,  440.  Poets,  346.  Politics,  547, 
551,  581.  Pythagoras,  433,  434.  Soc- 
rates, 479.  Thales,  427.  Xenophanes, 
401,  435,  436. 

Arnold,  Sir  Edwin,  379. 

Art,  333. 

Ashley,  Professor  W.  J.,  Attraction  of 
Capital,  67,  70.  Dumping,  84,  91. 
International  Exchange,  98.  Infant 
Industry,  61.  Productive  Potential- 
ities, 59,  60,  61,  62.  Tariff-Weapon, 
95,  HI,  116. 

Ashley,  Percy,  113. 

Atkinson,  Edward,  Boston  Land  Values, 
188,  Note.  Infant  Industry,  27.  Pau- 
per Labour,  45.  Protected  Labour  in 
the  United  States,  41.  United  States 
Steel  Industry,  44. 

Atomism,  Cf.  Diogenes  of  ApoUonia, 
Democritus,  Epicurus,  Spinoza,  Dide- 
rot, Haeckel,  Law  of  Substance,  Law 
of  Reason,  Skepticism. 


Australia,  Protection  in,  22,  61,  145. 
Land  Values,  189,  Note. 

■DAGEHOT,  WALTER,  282. 

Balance  of  Trade,  5,  7,  97,  135. 
Chiozza-Money  on,  16.  Huskisson  on, 
II.  Mill  on,  17.  Smith  on,  9,  10, 
17,  97.     Webster  on,  10. 

Balfour,  The  Rt.  Hon.  A.  J.,  94,  354. 

Balfour's  Cyclopedia,  363. 

BaU,  W.  Piatt,  313. 

Bank  Deposits,  Taxation  of,  157. 

Beaconsfield,  Earl  of,  629. 

Beeke,  Dr.   188.     Note. 

Bell,  Hugh,  on  Steel  Trade,  87,  88. 

Bentham,  J.  B.,  324. 

Bessemer  Process,  88. 

Bigelow,  John,  639. 

Bird,  Mr.  339. 

Bismarck,  Prince,  126. 

Blackstone,  Sir  William,  208,  et  seq. 

Book  of  the  Dead,  384,  et  seq. 

Booth.  The  Rt.  Hon.  Charles,  259,  291. 

Boston  Land  Values,  188  Note,  198. 

Bounties  and  Protection,  25,  65,  no,  112. 

Brahmanism,  372. 

Bright,  John,  61. 

Bristow,  Senator,  106,  642. 

Brougham,  Lord,  85. 

Bruno,  Giordano,  511. 

Bryce,  The  Rt.  Hon.  James,  49. 

Buckle,  Henry  Thomas,  558. 

Buddha,  378. 

Buddhism  and  Roman  Catholicism  363. 

Budge,  E.  A.  Wallis,  384,  385,  386. 

Bunsen,  Baron  von,  383. 

Burleigh,  Representative,  105. 

Burnouf,  Eugene,  379 

Butler,  Bishop,  and  Mencius,  364. 

Buyers'  Recollections  of  Northern  India, 
379- 

r>ALL,  H.  L.,  628. 

^^  Campbell-Bannerman,  Sir  Henry,  11 7. 

Canada,  Land  Values,  189  Note. 

Capital,  as  Factor  in  Production,  123,  261. 
Attraction  of,  66.  Creation  of,  by 
Indirect  Taxation,  38,  634.  Taxa- 
tion and,  18,  59,  73,  634,  661.  Cf. 
Clearing  House,  Finance. 


673 


674 


INDEX 


Cardell,  Mr.  G.  H.,  289. 
Cams,  Dr.  Paul,  361  Note. 
Carnegie,  Andrew,  67,  69. 
Chamberlain,  The  Rt.  Hon.  Joseph,  107, 

58s,  653. 
Charities    and     Commons,     Cf.     Pitts- 
burgh Survey. 
Chattels,  Taxation  of,  159. 
Chiozza-Money,  L.  G.,  Balance  of  Trade, 

16.     Indirect  Taxation,  145. 
Chomley,  C.  H.,  145. 
Christ,  521.     Unto  him  that  hath,  257. 
Bhnd  leaders  of  the  blind,  257.     That 
which  is  Csesar's,  299,  580.     The  Law 
of  Substance,  524,  526.     Fall  of  Man 
346.     Many  there  be  first  that  shall 
be  last,   525.    All  things  whatsoever 
ye  would,  526,  529,  580.     Judge  not, 
527.     The    Law    of    God,    529,    581. 
The  Kingdom  of  God,  581,  662. 
Cicero,  148,  343,  358,  417,  418,  479. 
Clarke,  James  Freeman,  388. 
Classification  of  Land  Values,  215. 
Classification  of  Sources  of  Revenue,  173. 
Cleanthes,  414. 
Clearing  House,   Fiscal,  621,  637,  642, 

646,  649,  655,  660. 
Cleveland,  Ex-President  Grover,  641. 
CHflford,  Professor  VV.  K.,  353. 
Cobden,  Richard,  211. 
Coglan,  Mr.,  188  Note. 
Coin,  Taxation  of,  157. 
Commerce  and  Exchange.     Cf.  Balance 

of  Trade. 
Commission,  Industrial,  of  United  States, 
77.     ItaUan     Railway,     272.     Royal, 
on  Local  Taxation,  Final  Report,  288, 
et.  seq. 
Commons,  Professor  John  R.,  260. 
Comte,  Auguste,  527,  532. 
Compensation,  213. 
Conference,  Rural  Reform,  288. 
Confiscation,  213. 
Confucius,  369. 

Connecticut,  Land  Values,  197. 
Connolly,  C.  P.,  638. 
Constitution,  Natural,  581. 
Constitutional  Evolution,  547,  577. 
Consumption,  Taxation  of.     Cf.   Taxa- 
tion, Indirect. 
Continental  System  of  Napoleon,   148. 
Continuity  of  Germ- Plasm,  522. 
Com  Laws,  42,  89,  558. 
Com  Rents,  283. 
Cousin,  Victor,    437    Note,    482,    Note, 

532. 
Credits,  Taxation  of,  155. 
Creuzbacher,  Dr.  G.,  141. 
Criterion  of  Tmth,  493,  495. 


Cmmpacker,  Representative,  104. 
Cudworth,  Ralph,  D.   D.,  407,  et  seq, 

413  Note,  531. 
Cynics,  483. 
C3Tenaics,  482, 

r)'ALWIS,  378. 

-*-^  Dante,  343. 

Darwin,  Charles,  307,  309,  310,  314. 

Davenant,  188.     Note. 

Democracy,  561. 

Democratic  Party  in  U.  S.,  640. 

Democritus,  400,  456,  520,  530. 

Descartes,  Rene,  511,  516. 

Deussen,  Professo.  Paul,  372,  373,  374. 

'Dewey,  Davis  Rich,  638. 

Dhammapada,  378. 

Diderot,  Denis,  513. 

Diffusion  of  Direct  Taxation,  237. 

Dingley,  Duty  on  Steel  and  Iron,  35, 
Bill,  104. 

Dinkard,  381. 

Diogenes  of  Appollonia,  428. 

Diogenes,  the  Cynic,  460,  488,  Note. 

Diogenes  Laertius,  425. 

Diplomacy  and  the  Tariff-Weapon,  97. 

Direct  Taxation,  151,  247.  Cf.  Clear- 
ing House,  Finance. 

Dumping,  Encouragement  of,  75.  Pre- 
vention of,  84. 

Dunlap,  J.  R.,  34. 

Duperron,  Anquetil,  373. 

Duty,  Import.  Cf.  Protection.,  Taxa- 
tion, Indirect. 

Duty,  Excise.     Cf.    Taxation,  Indirect. 

Duty,  Export,  128. 

pAST,  The,  656. 

•'-'  Ecclesiastes,  388. 

Echo,  The,  286. 

Economics,  Natural,  293. 

Educational  Tariffs,  59,  65. 

Egypt,  Religion  of,  383. 

Eleatics,  431. 

Ely,  Professor  R.  T.,  50. 

Empedocles,  402,  450. 

England,  652.  Aristocracy,  556.  Bal- 
ance of  Trade,  16.  Com  Laws,  42, 
89,  558.  Dumping,  89.  Preference, 
107.  Steel  Trade,  86.  New  Pro- 
tection, 55.    Cf.  Great  Britain. 

Epictetus,  419. 

Epicums,  493,  530. 

Erasmus,  658. 

Erdmann,  Professor  J.  E.,  Diderot,  513. 
Diogenes  of  Apollonia,  530.  Eleatics, 
44.1.  de  Lamettrie,  516.  Metaphy- 
sical Physicists,  443.  Plato,  484. 
Plotinus,  504.    Spinoza,  512. 


INDEX 


675 


Ethics,  526,  528.     Cf.  Golden  Rule. 

Eudides  of  Megara,  482. 

Euripides,  397. 

Eusebius,  380. 

Exchange,    International.     Cf.    Balance 

of  Trade. 
Excise.     Cf.  Taxation,  Indirect. 
Experience,  Philosophy  of,  535. 

pAGUET,  M.  EMILE,  565 

■*■  Fall  of  Man,  345. 

Faith,  504. 

Farmers,  245,  et  seq. 

Farr,  W.,  259. 

Farrer,  Lord,  227. 

Faust,  347. 

Ferguson,  James,  335. 

Feudal  System  and  present  system  of 
Land  Tenure,  210. 

Fiduciary  Institutions,  264,  615,  620, 
626,  634,  637,  660.  Cf.  Clearing  House, 
Finance. 

Finance,  615.  Direct,  636,  638.  High, 
628.  Indirect,  263,  628,  633.  Prac- 
tical, 582,  619,  Protectionist,  82, 
263,  634.  Railways,  273.  Socialistic, 
588,  et  seq.,  6ro,  619.  Cf.  Clearing 
House,  Fiscal  Problems. 

Fiscal  Mechanics,  615. 

Fiscal  Problems,  258,  619. 

Fitch,  John  Andrew,  51. 

Food  Taxes,  141. 

Ford,  Professor  Henry  Jones,  563. 

Foreigner,  Taxation  of,  128. 

Foss,  Governor,  241. 

Foville,  M.  de,  184. 

Fowler,  Congressman  Charles  N.,  566. 

Fox,  A.  W.,  on  Site  Rating,  229. 

Fox,  J.  M.,  on  Salt  Tax,  147. 

France,  644.  Tariff  Wars,  114,  115. 
Food  Taxes,  142.  Revolution,  Cf. 
Socialism. 

Franchise,  190,  619,  661.  Classification, 
215.  Estimation  of  Value,  190,  230. 
Cf.   Railways,   Finance. 

Francis,  A.  M.,  62. 

Freeman,  Edward  A.,  549,  553,  et  seq. 

riALLATIN,  A.,  43- 

^^  George,  Henry,  143. 

Germany,  647.  Dumping,  80,  87.  Food 
Taxes,  141.  German-Russian  Tariff 
War,  113.     Steel  Trade,  86. 

GiflBn,  Sir  Robert,  203. 

Gilchrist  Process,  88. 

Godkin,  Lawrence,  564,  566. 

Goethe,  309,  347. 

Gold  and  Wealth,  6,  7,  12. 

Gold  as  Monetary  Metal,  280,  et  seq. 


Golden  Rule,  Free  Trade,  117,  581. 
Lao-tsze,  367.  Confucius,  370.  Brah- 
manism,  375.  Buddhism,  379.  Zor- 
oaster, 381.  Egypt,  385.  Judaism, 
388.  Mohammed,  392.  Socrates,  404, 
Aristotle,  414.  Cicero,  418.  Pliny, 
419.  Haeckel,  526.  Spencer,  528. 
Christ,  542. 

Gorgias,  470,  539. 

Grayson,  Victor,  590. 

Greece,  Art,  334,  336,  339.  Religion, 
387,  393,  400.  Greek  Tragedy,  396. 
Philosophy,  423. 

Great  Britain,  Land  Values  (1885),  192, 
(1899)  201.     Cf.  England. 

Grote,  George,  394,  4oS- 

Groimd-Rent,  170,  190,  619,  Cf.  Fran- 
chise, Land,  Rent. 

Guyot,  M.  Yves,  142. 

TJADLEY,  A.  T.,  272,  Note. 

■■-*■  Haeckel,  Ernst,  516,  525. 

Hamburg,  188,  Note. 

Hamilton,  Alexander,  20,  25. 

Hendrick,  Burton  J.,  565.  Note.  575, 
Note. 

Heraclitus,  442,  469. 

Herodotus,  380,  383. 

Hesiod,  346. 

Hills,  Thomas,  188.     Note. 

Hines,  Mr.,  288. 

Holden,  G.  K.,  61. 

Homer,  342,  394. 

Hopkins,  Representative,  104. 

Homer,  Francis,  283. 

Hue,  Father,  363. 

Hume,  David,  514,  518. 

Huneker,  James,  340. 

Hunt,  H.  A.,  228. 

Hunter,  Robert,  50,  260. 

Hurd,  Richard  M.,  186,  187. 

Huskisson,  W.,  on  Balance  of  Trade,  11. 

Huxley,  Professor  Thomas,  269,  321. 
Animal  Automatism,  523.  Agnostic- 
ism, 517.  Democracy,  567.  Ethics, 
528.  Evolution,  309,  318,  325,  352, 
524.  Fatalism,  Materialism,  and  Athe- 
ism, 529,  530,  540.  Philosophy,  518. 
Positive  Philosophy,  532.  Politics, 
560.    Progress,  321. 

IMPERIALISM  and  Progress,  118. 
■*•  Improvements,    Capital  Value,     164. 

Rental  Value,  169. 
Incidence    of    Taxation.     Direct,     247 

268.     Indirect,  139,  239. 
Income-Tax,  151. 
Increment,  Unearned,  215,  et  seq.    Cf. 

Ground-Rent,  Franchise. 


676 


INDEX 


Indirect  Taxation,   126.     Cf.  Taxation. 

Industry,  Infant,  20,  60,  69.  Cf.  Pro- 
tection, Mill. 

Inheritance,  155. 

lonians,  426. 

Ireland,  Land  Values,  189,  Note. 

Isaiah,  388. 

Italy,  Railway  Commission,  272.  Tariff 
War,  114. 

TANSON,  Mr.  572. 

•'    Jehova,  387. 

Jevons,  Professor  W.  S.,  279,  283,  284, 

S7I. 
Judaism,  387. 

Judiciary,  in  United  States,  575,  638. 
Justice,    Social,    Socrates   on,    404.     Cf. 

Natural  Constitution,  581. 
Justin,  393. 
Juvenal,  383,  418. 

TZ'ANT,     Immanuel,    515,    516,    518, 

523,  534- 
Kellogg,  Mr.  C.  D.,  50. 
Kidd,  Benjamin,  319. 
Koran,  389,  et  seq. 
Krapotkin,  Prince,  67,  259. 

T  ABOUR,  as  Factor  in  Production,  123, 

•■-'  261.  Conditions,  46,  619.  Creation 
of  Demand  for  Labour,  38,  79,  634. 
Direct  Taxation  and  Labour,  265. 
English,  49,  267.  Indirect  Taxation 
and  Labour,  258.  Land,  Labour,  and 
Capital,  123,  261.  Old-.Age  Pensions, 
268,  661.  Pauper,  41.  Protection 
of,  in  United  States.,  46.  Protective 
Taxation,  263,  619,  634.  Wages,  40. 
Cf.  Living  Expenses.  Natural  Eco- 
nomics, 294. 

Lactantius,  504. 

Lamettrie,  Julien  de,  514. 

Land,  as  Factor  in  Production,  123,  261 
Agricultural,  185,  247.  Capital  Value 
of,  165.  Establishment  of  Land  Val- 
ues, 227.  Estimates  of  Land  Values, 
192.  Land,  Labour,  and  Capital, 
123,  261.  Land  Values  and  Real 
Estate,  184.  Land  Values  and  Popu- 
lation, 657.  London  Land  Values, 
286.  Rental  Value  of,  170.  Source 
of  Revenue,  173,  619.  Unearned  In- 
crement, 218.  Urban,  186.  Values, 
Classification,  215,  et  seq.  Society 
and  the  Land,  208,  657.  Land  Values 
and  Finance,  227,  619,  654,  661.  Cf. 
Clearing    House.     Finance. 

Land-Owning  Class,  247,    et  seq. 

Lane-Poole,  Stanley,  391. 


Lao-tsze,  366, 

Lefevre,  Shaw,  213. 

Legislation,  571.  Aristocratic,  557. 
Democratic,  566. 

Legge,  Dr.  James,  Confucius,  369.  Lao- 
Tsze,  366.     Mencius,  364. 

Leviticus,  388. 

Lewes,  George  Henry,  Metaphysical  Phil- 
osophy, 516.  Parmenides,  439,  Note. 
Philosophy,  518.  Proclus,  504.  Schol- 
asticism,   510.     Spinoza,    511,     513 

LiUie,  Arthur,  363. 

List,  Frederick,  Educative  Tariffs,  59,  65. 

Living  Expenses,  Taxation  of,  139,  141, 
241,  244,  25s,  265,  619. 

Locke,  John,  283. 

London  Land  Values,  286. 

Low,  A.  M.,  34. 

Lucretius,  343,  355,  417,  531. 

Luxuries,  Taxation  of,  137. 

V|ACAULAY,  Lord,  Letter  to  Ran- 

■'•^■*-  dall,  552,  642. 

Macleod,  D.,  4. 

Maine,  Sir  Henry,  Legislation,  323. 
Democracy,  561,  562.  Progress,  331, 
341. 

MaUock,  W.  H.,  327,  et  seq. 

Man,  Fall  of,  345.  The  Great  Man,  326, 
354.     Science  and  Man,  347.  > 

i\Iartia,l,  410. 

Mathews,  Mr.,  229. 

Maudsley,  Dr.  Henry,  307,  349,  353,  354. 

Mayhew,  Henry,  258. 

Mayo-Smith,  Professor  Richard,   260. 

McCall,   Representative,   104. 

M'Laren,  D.,  144. 

McKinley,  President,  32. 

Megarians,  481. 

Mellissus,  441. 

Mencius  and  Bishop  Butler,  364. 

Mercantile  System,  4,  17. 

Metrodorus  of  Chios,  472. 

Miles,  H.  E.,  105. 

MiU,  John  Stewart,  124.  Balance  of 
Trade,  17,  Foreigner,  Taxation  of, 
128,  et  seq.  Food  Supply,  112 
Ground-Rents,  171,  215,  216,  235. 
Improvement  Rent,  169,  Income, 
Source  of,  123.  Income-Tax,  153, 154. 
Infant  Industry,  21,  22,  61.  Legal 
Proceedings,  Taxation  of,  162.  Neces- 
saries, Taxation  of,  150.  New  Protec- 
tion, 112.  Octrois,  163.  Protection  of 
Industry,  19,  32,  55. 

Milton,  John,  345. 

Miscellaneous  Taxes,  161. 

Mitra,  Rajendralal,  373. 

Mohammed,  389. 


INDEX 


677 


Money,  278.  Tabular  Standard,  284, 
Metallic,  280.  Paper,  629.  Cf.  So- 
cialism. 

Monier-Williams,  Sir  Monier,  361,  364, 
378. 

Morley,  Lord,  89. 

Mortgages,  156,  232. 

Mosheim,  J.  L.,  394,  410. 

Mulhall,  M.  G.,  185,  205,  206. 

Miiller,  Professor  F.  Max,  421.  Buddha, 
378,  379-  Language  and  Religion, 
359.  Parsis,  381.  Vedantic  Philos- 
ophy,  373,  374. 

Mun,  Thomas,  4. 

Music,  339. 

Mysticism,  344,  394,  502. 

TU-APOLEON,  Continental  System,  148. 

■'■       Finance,  653.     Progress,  644. 

Natural  Economics,  293. 

Naumann,  Emil,  341. 

Navigation  Acts,  American,  574.  Eng- 
hsh,  95. 

Necessaries,  Taxation  of,  138.  Cf.  Liv- 
ing Expenses. 

New  Zealand  Land  Values,  206. 

Nirvana,  379. 

Notes,  Taxation  of,  158. 

Q'CONNOR,  JUDGE  ARTHUR,  211, 

^^  231. 

Octroi,  163. 

Oppenheim,     F.,    Report    on    German 

Manufactures,  79. 
Ormazd,  380. 
Orpheus,  393. 
Ovid,  346. 

pABRER  Pavlo,  188,  Note. 

-*■     Painting,  337. 

Pahlavi  Texts,  381. 

Palmer,  E.  H.,  392. 

Parmenides,  437. 

Parsis,  381. 

Pauperism  and  Unemployment,  50. 

Pauper  Labour,  41. 

Payne-Aldrich  Bill,  106. 

Peel,  Mr.,  48. 

Pennington,  J.  B.,  146. 

Pennsylvania  Land  Values,  195. 

Penrose,  Senator,  52. 

Pensions,  Old-Age,  268,  661. 

Petronius,  357. 

Petty,  188,  Note. 

Phjedo,  487. 

Philosophy,  423.  Attic,  475.  Cosmic, 
423,  521.  Greek  Philosophy  and  Re- 
ligion,     400.     Modem,      509.      Pre- 


Socratic,     423.       Post-Socratic,     475 

Political    and    Progressive,    316,    547. 

Results   of   Twenty-five   Centuries   of 

Speculation,  518.     Scholastic,  510.  Cf. 

Atomism  and  Skepticism. 
Physiocrates,  293,  et  seq. 
Pierce,  Franklin,  574,  575. 
Pittsburgh  Survey,  46,  50. 
Platforms,   Pohticai,   In   United  States; 

Republican,    639.       Progressive,    640. 

Democratic,  641. 
Plato,  Poets,  347.     God  of,  404.     Theory 

of  Knowledge,  483. 
Pliny,  The  Elder,  417,  418,  419. 
Plotinus,  502,  516. 
Plutarch,  423,  448. 
Poetry,  341. 

Pontics,  547.     Practical  Politics,  628. 
Political  Practice,  582.     Pohtical  Theory, 

547. 

Polybius,  548,  550,  5S3,  578. 

Poverty,  Chief  Cause  of,  246.  In  United 
States,   50. 

Pragmatism,  534. 

Preference,  107. 

Proclus,  504. 

Proctor,  R.  A.,  351,  352,  353. 

Profit,  as  Factor  in  Production,  123,  261, 
296. 

Production,  Elements  of,  123,  261.  Cf. 
Natural  Economics. 

Progress,  303,  568.  Imperialism,  118. 
Intellectual,  326.  Law  of  Intellectual 
Progress,  331.  Progress  and  Politics, 
303.  Political  Progress  and  Reason, 
316,  568. 

Progressive  Party  in  United  States,  640. 

Property,  Classification  of,  151.  Per- 
sonal, 151.  Real,  164.  Indirect  Tax- 
ation, 256,  261,  579,  619.  Cf.  Finance, 
Living  Expenses,  Natural  Economics. 

Protagoras,  400,  467,  520. 

Protection,  Old,  3.  Balance  of  Trade, 
5,  7.  Bounties,  25,  65.  Capital,  18. 
Demand  for  Labour,  38.  Protection- 
ist Finance,  82,  639,  Cf.  Finance. 
Gold  and  Wealth,  6.  Industry,  Pro- 
tection of,  28.  Infant  Industr>-,  20, 
69.  Labour  and  Protection,  38,  46, 
619.  Pauper  Labour,  41,  69.  Max- 
ims, 28.  Origins  of,  3.  Practical, 
583,  584,  588,  618,  632,  et  seq.  Price 
and  Protection,  28,  32,  42,  et  seq,  59. 
First  Principles  of  Protection,  3. 
Wages,  40,  Cf.  [Mill,  Smith,  Taxation, 
Finance. 

Protection,  New,  55.  Analysis  of,  57. 
Attraction  of  Capital,  66,  70.  Bounties 
no,   112.     Dumping,  Encouragement 


678 


INDEX 


of,  75.  Prevention  of,  84.  Finance, 
264.  Imperialism,  118.  Preference, 
107.  Productive  Potentialities,  59 
69.  Progress,  118.  Retaliation,  109. 
Tariff-Weapon,  94.  Cf.  Ashley,  Mill, 
Smith,    Finance. 

Protective  Taxes,  Cf.  Living  Expenses, 
Repeal  of,  224,  Cf.  Clearing  House. 

Pyrrho,  469,  497. 

Pythagoras,  394,  401,  418,  433. 


Q 


UATREFAGES,  A.  DE,  356. 


OAILWAYS,    and     Direct    Taxation, 

■*^  273.  Holding  Company,  276.  Cf. 
Finance. 

Randall,  H.  S.,  Macauley's  Letter,  552. 

Rau,  K.  H.,  65. 

Rawhnson,  George,  380,  384. 

Real  Estate  and  Land  Values,  184,  et  seq. 

Reason  and  Politics,  316,  568.  Law  of 
Reason,  526. 

Recovery  of  Tax  on  Land  Values,  235. 

Religion,  356. 

Renan,  Ernest,  356,  387,  542. 

Rent,  as  Factor  in  Production,  123,  261, 
265.  Improvement  Rent,  169.  Cf. 
Natural  Economics,  Ground-Rent, 
Land. 

Repeal  of  Indirect  Taxes,  224.  Cf. 
Clearing  House. 

Report  on  Manufactures.     Cf.  Hamilton. 

Retaliatory  Tariffs.     Cf.  Tariff- Weapon. 

Republican  Party  in  United  States,  639. 

Revenue,  Private,  123. 
/  ,         Revenue,  Social,  123.    Direct,  151.     In- 
direct j'  126.     Sources  of,  173.     Taxes, 
.^^         Repeal  of,  226.     Cf.  Clearing  House, 
/  /;'|«|*J'''>Finance,  Living  Expenses,  Taxation. 
'  -■^/--'Rita.r'dio,  David,  235. 

Ricknian,  Mr.  229.  '*'  • 

Riis,  Jacob,  259. 

Rogers,  Professor  Thorold,  259.  Eng- 
lish Labour,  266,  557.  Protection  and 
Labour,  53.     Site  Rating,  653. 

Rollit,  Sir  Albert,  271. 

Roman  Catholicism  and  Buddhism,  363. 

Rome,  Religion  of,  417. 

Roosevelt,  Ex-President,  Theodore,  307. 

Roscher,  W.,  New  Protection,  59,  64, 

8s,  98. 

Rountree,  B.  S.,  259. 
Rural  Reform  Conference,  288. 
Russell,  Charles  Edward,  630. 
Russell,  Sir  Edward,  290. 
Russia,     650.      Russian-German    Tariff 
War,  113. 


CABIN,  Mr.  229. 

•^  Sale,  George,  391. 

Salt  Tax,  Indian,  and  English  Industry, 
146,  655. 

Schlegel,  A.  W.  von,  396. 

Schmoller,  Professor  Gustav,  56,  94,  no. 

Scholasticism,    510. 

Schopenhauer,  377. 

Science  and  Man,  349.     Cf.  Progress. 

Sculpture,  336. 

Security  Values  and  Taxation,  155,  583. 
Cf.  Clearing  House  and  Finance. 

Seddon,  Mr.,  16. 

Sextus  Empiricus,  469,  498. 

Shakespeare,  345. 

Shearman,  T.  G.,  Land  Values,  188,  Note. 
Direct  Taxation,  192.  Incidence  of 
Taxation,  Indirect,  240,  et  seq.  Di- 
rect, 247,  et  seq. 

Sherman  Law,  575. 

Sherman  Silver  Act,  573. 

Sibylline  Oracles,  394. 

Simonides  and  Hiero,  358.     Justice,  404. 

Skepticism,  Cf.  Xenophanes,  Protagoras, 
Gorgias,  Pyrrho,  Spinoza,  Hume,  Kant, 
Huxley,  Law  of  Reason,  Atomism. 

Smart,  Professor,  on  Dumping,  86,  93. 

Smith,  Adam,  Balance  of  Trade,  9,  10, 
17,97.  Gold  and  Wealth ,  6 .  Ground- 
Rent,  Taxation  of,  170,  172,  229,  235. 
Improvement  Rent,  Taxation  of,  169. 
Infant  Industry,  62,  63.  International 
Exchange,  10.  Land-tax,  Invariable 
167.  Luxuries,  137.  Navigation  Acts 
95,  III.  Necessaries,  32,  150.  Pro- 
tection and  Capital,  19,59.  Protection 
of  Industry,  19,  63.  New  Protection, 
III.  Retaliation,  116.  Revenue, 
Sources  of,  123.  Taxation,  Principles 
of,  124.  Transfers,  162,  Wealth, 
Definition   of,   6. 

Socialism,  Practical,  588. 

Society,  Aristocratic,  556.  Democratic, 
561.  Indirect  Taxation,  579,  589. 
The  Land,  208,  657.  Natiu-al,  568. 
Political,  303,  316,  547,  578.  Pro- 
gressive Society,  305.  Cf.  Progress, 
Finance,  Clearing  House. 

Socrates,  403,  418,  466,  475. 

Socratic  Schools,  479. 

Sophocles,  397,  398. 

Sources  of  Revenue,  Private,  123.  Pub- 
lic, 173- 

Spallart,  188,  Note. 

Spelman,  Sir  Henry,  210. 

Spencer,  Herbert,  269,  311,  322,  527. 
Ethics,  528.  Evolution,  350.  Philos- 
ophy, 533.  Land  Question,  214,  221,  et 
seq.  Legislation,  572.  Religion,  358, 533. 


INDEX 


070 


Spinoza,  Benedict,  511,  516. 

Standard,  Tabular,  of  Monetary  Values, 

284. 
Steel  Industry  in  United  States,  34,  et  seq. 

44,  SI,  625.     England,  87. 
Steffens,  Lincoln,  565,  Note,  566. 
Stephen,  Sir  Leslie,  516. 
Stilpo,  4S1. 
Stoics,  414,  495. 
Strachey,  St.  Loe,  609,  Note. 
Strauss,  Richard,  340,  341. 
Substance,  Law  of,  521. 
Survey,  Pittsburgh,  46,  50. 
Symonds,  Arthur,  341. 
Symonds,  John  Addington,  396. 
Superman,  326,  341. 
Swan  River  Colony,  48. 

TPARBELL,  Ida  M.,  106. 

-^    Tao  teh  king,  366. 

Tariff- Weapon,  94.  Preference,  107. 
Repeal  of,  224.  Trade,  97.  Tariff 
Warfare,  109.  France-Italy,  114. 
France-Switzerland,  1 14.  Germany- 
Russia,  113. 

Taxation,  Principles  of,  123.  Sources  of 
Private  Revenue,  123.  Classification 
of  Sources  of  Social  Revenue,  173. 

Taxation,  Direct,  151.  Assessment,  Cf. 
Clearing  House.  Bank  Deposits,  157. 
Chattels,  159.  Classification  of  Prop- 
erty, 151.  Coin,  157.  Credits,  155. 
Difficulties  of,  179,  582,  620.  Diffu- 
sion of,  235.  Ground-Rents,  170.  Im- 
provements, Capital  Value,  164.  Rental 
Value,  169.  Incidence,  247.  Income, 
151.  Inheritance,  155.  Labour,  268. 
Land,  Capital  Value,  165.  Rental 
Value,  170.  Land-tax,  Invariable, 
167.  Mortgages,  156,  232.  Miscel- 
laneous Taxes,  161.  Notes,  158.  Per- 
sonal Property  151.  Real  Property, 
164.  Securities,  155.  Transfers,  162. 
Wages,  268.  Cf.  Clearing  House, 
Finance,  Railways,  Ground-Rents, 
Land  Values. 

Taxation,  Indirect,  126,  569.  Advan- 
tages of,  128,  141,  149.  Prince  Bis- 
marck on,  126.  Consumption,  126. 
Convenience,  141.  Expense,  143,  240, 
Note.  Fiduciary  Institutions,  583. 
Cf.  Clearing  Ho.use  and  Finance.  Food 
Taxes,  141.  Foreigner,  Taxation  of, 
128.  General  Principles,  123.  In- 
cidence, 139,  in  the  United  States,  239. 
Labour,  261.  Living  Expenses,  139. 
Luxuries,  137.  Necessaries,  138. 
Octroi,  163.  Practical  Effects,  583, 
588,  620,  635.     Preference,  107.    Rev- 


enue, 136.  Repeal,  224,  624.  Secur- 
ity, 142.  In  the  United  States,  628. 
Wages,  265.  Cf.  Living  Expenses, 
Protection. 

Taxation,  Natural,  179.  Classification 
of  Sources  of  Revenue,  173.  Con- 
fiscation and  Compensation,  213. 
Difficulties,  179,  582,  620.  Diffusion, 
235.  Incidence,  247,  265.  Natural 
Economics,  293.  Land  Values,  Esti- 
mation of,  181.  Classification  of,  217. 
Transition,  208,  224.  Cf.  Clearing 
House,  Land,  Finance,  Railways. 

Taxation  and  Capital,  19,  59,  66,  73.  Cf. 
Clearing  House,  Finance. 

Tax  Reduction,  224.  Productive,  626, 
637.     Cf.  Clearing  House. 

Thales,  400,  426. 

Theatetus,  475. 

Thiers,  A.,  64,  148,  609,  Note.    653,  Note. 

Thomas  Gilchrist  Process,  88. 

Thompson,  Mr.  363. 

Timon,  the  Sillograph,  401. 

Tolstoi,  Count  Leo,  347. 

Toque  villa,  Alexis  de,  49. 

Tragedy,  Greek,  396. 

Transfers,  Taxation  of,  162. 

Transition  from  Indirect  to  Direct  Fiscal 
Methods,    208.     Cf.    Clearing  House. 

Truth,  Criterion  of,  493,  495. 

Tylor,  Mr.,  331. 

Tyndall,  John,  510,  533. 

TTNEARNED     INCREMENT,     171, 

^   215,  218. 

United  States,  628.  Democracy,  561. 
Dumping,  76.  Finance,  583.  Incidence 
of  Indirect  Taxation,  239.  Industrial 
Conditions,  46.  Land  Values  (1890) 
193.  Labour,  46.  Pauperism  and  Un- 
employment, 50.  Population,  263.  Cf. 
Protection,  Finance,  Tariff-Weapon, 
Practical  Politics. 

United  States  Steel  Corporation,  51,  624. 

Upanishads,  373,  et  seq. 

•yEDANTA  Philosophy,  373. 
'    Vendidad,  380. 
Verender,  Frederick,  240,  Note. 
Victoria,  Queen,  290. 
Vigers,  Mr.,  228. 
Virgil,  314,  343- 

IX^^AGES,  as  a  Factor  in  Production, 

"'123,261.  Direct  Taxation,  268.  In- 
direct Taxation,  265,  619.  Protec- 
tion, 40.     Cf.  Labour. 

Wakefield,  E.  G.,  47. 

Walker,  Professor  Francis  A. ,"260, 280, 283. 


68o 


INDEX 


Wallace,  Alfred  Russel,  307,  313. 

Warfare,  Tariff,  109.     Cf .  Tariff- Weapon 

Wealth,  Definition,  6.  Distribution  and 
Taxation,  255.     Cf.  Finance. 

Weapon,  Tariff,  94. 

Webster,  Daniel,  on  Balance  of  Trade,  10. 

Weismann,  Dr.  August,  311,  313,  522. 

Wells,  D.  A.,  Incidence  of  Land-tax, 
236.  Steel  and  Iron  Industry  of 
United  States,  36.    Taxation,  160. 

Weston,  Mr.  W.,  288. 

White,  Andrew,  D.  363,  364. 

Wilson,  President,  641. 

VENOPHON,  479,  Note. 

•**■  Xenophanes,  401,  402,  435. 


VOUNG,  Arthur,   188,  Note.    Physio- 
^    crate  Land-tax,  296,  297,  298. 


7ELLER,    Dr.   E.,    Democritus,  457, 

^  530.  Note.  Empedocles,  455.  Epi- 
curus, 530.  Note,  433.  Megar- 
ians,  482.  Note.  Parmenides,  440. 
Skeptics,  497.  Zeno,  the  Stoic,  496. 
Note. 

Zeno  of  Elea,  441,     460. 

Zeno,  the  Stoic,  495. 

Zend  Avesta,  380. 

Zeus,  397,  et  seq.,  415. 

Zoroaster,  380. 


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